Annual Report • Mar 30, 2023
Annual Report
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at 31 December 2022
| DIRECTOR'S REPORT AT 31 DECEMBER 2022 ______3 |
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|---|---|
| Carel Industries Group structure__________ | 8 |
| Corporate bodies _________ |
9 |
| Operations and markets __________11 |
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| Other significant events __________19 |
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| Overview of the group's performance ___________21 | |
| Overview of the parent's performance: Carel Industries S.p.A. _____26 | |
| HR and organisation_____________29 | |
| 2022 R&D activities ______________32 |
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| CAREL INDUSTRIES GROUP CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO AT 31 DECEMBER 2022 _________39 |
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| Statement of financial position___________40 | |
| Statement of profit or loss ________41 |
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| Statement of comprehensive income ___________41 |
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| Statement of cash flows _________42 | |
| Statement of changes in equity __________43 |
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| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS_________44 | |
| Statement on the consolidated financial statements pursuant to article 154-bis of Legislative | |
| decree no. 58/98 and article 81-ter of Consob regulation no. 11971 of 14 May 1999 as | |
| subsequently amended and supplemented ___________102 |
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| Independent auditors' report ___________103 |
The three-year period just ended has been among the most troubled in recent history, afflicted by one of the worst pandemics of the last century and the recent conflict between Russia and Ukraine. These two events have enormous economic and social repercussions that still cannot be properly assessed. This situation has been complicated by another two factors that are in a certain way linked and caused or exasperated by the pandemic and the war: the scarcity of electronic and energy raw materials, which, together with other factors, has caused prices to soar, especially in Europe.
The group has proven itself fully capable of adapting to the unexpected situations and sudden changes arising out of this extremely challenging scenario, managing to increase its revenue by a record 29.6% (+20.8% on a like-for-like basis), which is even more positive if the rise of 26.8% of 2021 is considered. Thanks in part to its operating leverage, this achievement reflected on profitability, bringing the ratio of EBITDA to revenue to 20.5%, a slight increase on the previous year. Growth and profitability positively impacted on strong cash generation, part of which was earmarked for M&A activities.
The group carried out four significant transactions during the year (for a total of eight acquisitions since its listing), which increased its debt by around €58 million. It strengthened its position in the sector of sensors dedicated to the air conditioning and refrigeration segments by increasing its investment in the Italian company Arion and by acquiring 100% of Senva, based in Oregon (US), specialised in the design and manufacture of a wide range of sensors, and with
"...the results are based on three strategic pillars: organic growth, external expantion and a strong focus on connectivity and innovation..."
a significant presence in the indoor air quality market. In July, Carel acquired 70% of Lombardy-based Sauber, mainly active in the field of on-field installation and maintenance services for HVAC/humidification systems with a strong focus on energy efficiency. Finally, in September, it completed the acquisition of 100% of Klingenburg, specialised in heat recovery in ventilation systems, making Carel the European leader of this sector. The group worked intensely this year to grow both organically and through acquisitions and it will continue this journey in the next few years as its M&A strategy underpins its growth objectives.
This strategy is increasingly intertwined with Carel's sustainability vision, as demonstrated by its signing the United Nation's Global Compact which promotes the application of ten universal principles related to human rights, labour, the environment and anti-corruption that the group complies with. Carel's commitment to growth that also takes into account protection of the environment and social aspects has been acknowledged by several ESG rating agencies and it has improved most of these ratings during the year. As a result, MSCI, one of the most important international rating providers, has included Carel in the ESG Leader Index.
In short, 2022 was both challenging but rewarding as the group basically doubled in size compared to 2018, when it was listed. In less than five years, we have succeeded in making Carel bigger, more resilient, more efficient and sustainable and we can also proudly celebrate its 50th anniversary. In 2023, the company will be 50 years old, completing half a century of innovation, development and growth and looking forward to taking on tomorrow's challenges.
Chairperson Luigi Rossi Luciani
The following graph shows the group's structure at 31 December 2022:
*= 1% held by Carel France sas
| Chairperson | Luigi Rossi Luciani | |
|---|---|---|
| Executive deputy chairperson | Luigi Nalini | |
| Chief executive officer | Francesco Nalini | |
| Board of directors | Executive director | Carlotta Rossi Luciani |
| Independent director | Cinzia Donalisio | |
| Independent director | Marina Manna | |
| Independent director | Maria Grazia Filippini | |
| Chairperson | Paolo Prandi | |
| Standing statutory auditor | Saverio Bozzolan | |
| Board of statutory auditors | Standing statutory auditor | Claudia Civolani |
| Alternate statutory auditor | Fabio Gallo | |
| Alternate statutory auditor | Alessandra Pederzoli | |
| Independent auditors | Deloitte & Touche SpA | |
| Chairperson | Marina Manna | |
| Audit, risk and sustainability | Member | Cinzia Donalisio |
| committee | Member | Maria Grazia Filippini |
| Chairperson | Cinzia Donalisio | |
| Remuneration committee | Member | Marina Manna |
| Member | Maria Grazia Filippini | |
| Supervisory body | Chairperson | Alberto Berardi* |
| as per Leg. dec. no. 231/2001 | Member | Arianna Giglio |
| Member | Alessandro Grassetto |
(*) appointed by the board of directors on 16 February 2023. In office in 2022: Fabio Pinelli.
RESIDENTIAL APPLICATIONS Heating, Ventilation and Air Conditioning
The group is active in the design, manufacturing and global distribution of technologically innovative components and solutions (hardware and software) to achieve energy-efficient control and regulation instruments for the air conditioning (Heating Ventilation Air Conditioning, "HVAC") and refrigeration markets (together "HVAC/R"). In this context, the group designs, manufactures and markets control and humidification solutions for the application segments:
With reference to the HVAC sector, the group offers solutions for integration into individual units, such as heat pumps, shelters, rooftops, computer room air conditioners (CRAC), chillers and air handling units. Its industrial applications for the air-conditioning sector are designed for data centres, the process industry, commercial applications mainly consisting of components for air-conditioning systems in commercial buildings, and residential applications principally comprising control solutions for heat pumps.
The following charts show the Carel systems:
• for applications in data centre air-conditioning systems:
• for air treatment systems:
In the refrigeration sector, the group specialises in the design, manufacturing and distribution of control systems for the food retail and food service segments. Carel's offer is for:
Example application of Carel's solutions for commercial refrigeration in food retail (supermarkets):
Example application of Carel's solutions for commercial refrigeration in food service (quick service restaurants)
Example application of Carel's solutions for commercial refrigeration in food service (beverage coolers):
The group's portfolio is complemented by services linked to Carel's solutions, such as commissioning (contract work), remote management and monitoring of the group's HVAC/R systems and application components, which allows for "dialogue" between the group's service centres and end customers, subscriptions for services dedicated to the remote management and monitoring of plant and machinery through the processing of data collected using Internet of Things features.
The IoT solution has been developed to integrate the specific solutions of the HVAC/R markets via cloud and on-site solutions. The portfolio includes benchmarking, statistics, alarms and standard reporting, whereby users can optimise their daily activities and achieve their goals more effectively in terms of services, energy, quality and marketing. The development of this business is crucial for Carel, including for its future.
Example IoT solutions for the HVAC and refrigeration markets
The group operates through 37 companies with 15 production sites in Italy, Croatia, Germany, China, the US, Brazil and Poland.
The main growth trends of the HVAC market consolidated in 2022. Specifically, the data centre segment continued to be very dynamic, assisting a large number of companies with their digital transition. The market showed growing interest in the issue of air quality and healthy environments (indoor air quality), which Carel is well-placed to respond to both thanks to its extensive and very competitive portfolio of products built up over the years and the acquisitions of recent years. In addition, the residential HVAC segment picked up speed, especially in Europe, mainly due to the interest in high efficiency hydronic heat pumps. This segment, already experiencing strong growth as it supports energy sustainability policies and the development of renewable energy sources, has been bolstered by the REPowerEU plan, the EU's response to the war in Ukraine.
The commercial refrigeration market saw huge demand in 2022, which was particularly fast-paced in the first half of the year, mostly in the food retail segment as a result of large investments by the sector operators. The uptick on the previous year slowed down in the second six months of the year. One factor behind the most requested technologies was the adoption of natural refrigerants, particularly in Europe with the F-Gas Regulation, and Carel is well-placed to respond to the impelling objectives of reducing the carbon footprint with its high energy savings solutions. The food service segment, which had been the hardest hit by the Covid-19 pandemic, performed similarly to the food retail segment albeit at a slower pace, especially in the second half of the year.
2022 was an extremely positive year for the Carel Group with a 29.6% rise in turnover, while the increase would have been 26.5% using constant exchange rates. This satisfactory achievement is partly due to the acquisitions made during the year, especially that of Klingernburg, a leading producer of heat recovery systems, and Senva, which designs, manufactures and sells sensors.
On a like-for-like basis, revenue would have grown 20.8% at current exchange rates.
The group's profit was however sometimes affected by problems in the supply chain for electronic components, which at times made it difficult to fully meet market demand.
The upturn in demand continued throughout 2022, although it has not yet reached its full potential due to the same issues that affected the supply chain in 2021 (principally related to electronic and electromechanical components in Carel's case). Nonetheless, the actions and counter measures introduced by the group enabled an additional improvement in its flexibility and resilience, thus narrowing the gap between demand and delivery. The refrigeration market's performance was less brilliant, mostly due to an accumulation of difficulties in the supply chain and a deceleration in demand, which affected the food service market in particular.
Revenue by business segment is broken down in the following table (thousands of Euros):
| (thousands of Euros) | 2022 | 2021 | Variation % | FX variation % |
|---|---|---|---|---|
| HVAC revenue | 371,852 | 270,011 | 37.7% | 34.4% |
| REF revenue | 168,934 | 145,826 | 15.8% | 13.2% |
| Total core revenue | 540,786 | 415,837 | 30.0% | 27.0% |
| Non-core revenue | 4,066 | 4,581 | (11.2%) | (11.4%) |
| Total revenue | 544,852 | 420,418 | 29.6% | 26.5% |
The HVAC sector's strong acceleration in the EMEA area was driven by the boom seen in the residential segment as well as the contribution of the acquiree Klingenburg in the second half of the year. The excellent performance of the American market was assisted by an expanding market and the acquisition of new market share, with a greater focus on energy efficiency. The group continued to develop its footprint in the APAC area and was only partly held back by the periodic lockdowns in China imposed to contain the spread of Covid-19, which led in some cases to the freezing of investments.
The group performed particularly well in the American refrigeration market and continued its strategy to gain market share in both the food retail and food service segments. It recorded double-digit growth in the APAC and EMEA areas despite the contraction in demand, due to both the continued local lockdowns for Covid-19 and slower demand in the food service segment.
A breakdown of revenue by geographical segment is provided below (thousands of Euros):
| (thousands of Euros) | 2022 | 2021 | Variation % | FX variation % |
|---|---|---|---|---|
| Europe, Middle East and Africa | 382,730 | 302,311 | 26.6% | 26.8% |
| APAC | 78,186 | 62,725 | 24.6% | 17.0% |
| North America | 70,974 | 46,030 | 54.2% | 38.8% |
| South America | 12,962 | 9,352 | 38.6% | 22.8% |
| Total | 544,852 | 420,418 | 29.6% | 26.5% |
Carel Industries S.p.A.'s ordinary shares were listed on the STAR segment of the stock market organised and managed by Borsa Italiana S.p.A. on 11 June 2018. The transaction entailed the placement of 35,000,000 ordinary shares, which subsequently increased to 40,250,000 on 25 June 2018 following the exercise of the greenshoe option. The placement with institutional investors involved 40.25% of the share capital and 25.20% of shares with voting rights. On 5 January 2021, Luigi Nalini S.a.p.a. sold 3,582,560 ordinary Carel shares, equal to about 3.6% of its share capital.
In 2022, the share price lost 11.7%, levelling off at €23.50 per share on the last trading day of the year. However, it outperformed the FTSE Italia All-Share index which shows the stock exchange's overall performance, down 14.1% at the end of the year. Approximately 35,000 shares were traded on average a day while the maximum price reached in the year was €26.80 per share.
| CAREL INDUSTRIES SHARE AT 31 DECEMBER 2022: | |||
|---|---|---|---|
| Stock exchange: | Borsa Italiana STAR segment | ||
| Isin code: | IT005331019 | ||
| Ticker: | CLR | ||
| Indexes: | FTSE All-share Capped, FTSE Italia All-Share, FTSE Italia Mid Cap, FTSE Italia Star, FTSE Italia Industria, FTSE Italia Edilizia e Materiali |
||
| Number of shares: | 100,000,000.00 | ||
| Nominal amount: | Not assigned | ||
| Earnings per share: | 0.62 | ||
| Dividend per share: | 0.18 |
| CERTIFIED |
|---|
| MAJOR SHAREHOLDERS AT 31 DECEMBER 2022 | Number of shares | % of share capital | Voting rights | % of voting rights |
|---|---|---|---|---|
| Luigi Rossi Luciani S.a.p.a. | 36,167,433 | 36.17% | 72,334,866 | 45.05% |
| Luigi Nalini S.a.p.a. | 20,000,007 | 20.00% | 40,000,014 | 24.91% |
| 7 Industries B.V. | 4,932,595 | 4.93% | 9,332,595 | 5.81% |
| Other * | 38,899,965 | 38.90% | 38,899,965 | 24.23% |
| TOTAL | 100,000,000 | 100.00% | 160,567,440 | 100.00% |
* Including 30,482 treasury shares
In 2022, the group focused on important business acquisitions in line with one of its strategic pillars, external growth, aiming to strengthen its core business by acquiring market shares in the reference geographical segments and in complementary applications.
In accordance with IFRS 3, the purchase price allocation procedure is currently underway for the various acquisitions. Reference should be made to the Consolidation scope section of the notes to the consolidated financial statements for further information.
On 15 April 2022, the parent completed the acquisition of an additional 30% of Arion S.r.l., in which it already held a 40% investment.
Arion S.r.l. was established in 2015 by Bridgeport S.p.A. and Carel Industries S.p.A. and specialises in the production of sensors for the air-conditioning and refrigeration sectors.
In 2021, it generated revenue of approximately €2.7 million and a gross operating profit of about €0.7 million; its net financial position was roughly €0.3 million. For more information about the assets acquired and liabilities assumed at the acquisition date, reference should be made to the Consolidation scope section of the notes to the consolidated financial statements. The transaction became effective on 1 April 2022 and the consideration paid for 30% of the company amounted to €1.6 million.
At the acquisition date, the acquiree had four employees.
On 13 June 2022, the parent entered into a binding agreement to acquire 70% of Sauber S.r.l., a company based in Porto Mantovano (MN), which provides on-field services for the installation and servicing of cooling/ humidification systems in residential and commercial buildings.
The parent and the seller have put and call options for the remaining 30% of Sauber to be exercised in 2025.
In 2021, Sauber generated revenue of approximately €7.1 million and a gross operating profit of about €0.9 million; its net financial debt was roughly €0.8 million. For more information about the assets acquired and liabilities assumed at the acquisition date, reference should be made to the Consolidation scope section of the notes to the consolidated financial statements. The transaction became effective on 12 July 2022 and the consideration paid for 70% of the company amounted to €3.0 million.
At the acquisition date, the acquiree had 55 employees.
On 2 September 2022, the parent completed its acquisition of 100% of Klingenburg GmbH and Klingenburg International Spzoo, based in Germany and Poland, respectively, and market leaders with a wide range of products used mainly for heat recovery in ventilation and humidification systems, adiabatic cooling and air purification. Klingenburg GmbH wholly owns three distribution companies in Spain, the United Kingdom and the US.
In 2021, the two companies generated aggregated revenue of approximately €39 million and a gross operating profit of about €2.4 million. For more information about the assets acquired and liabilities assumed at the acquisition date, reference should be made to the Consolidation scope section of the notes to the consolidated financial statements. The transaction became effective on 1 September 2022 and the consideration paid for 100% of the two companies amounted to €15.8 million.
At the acquisition date, the acquirees had 165 employees.
On 12 October 2022, the subsidiary Carel USA completed its acquisition of the business of Senva Inc., based in Oregen (US), specialising in the design and manufacture of a wide range of sensors, mainly in the airconditioning and ventilation sectors, and with a special line for indoor air quality launched in 2021.
In 2021, Senva generated revenue of approximately USD12.7 million and a gross operating profit of about USD2.4 million. For more information about the assets acquired and liabilities assumed at the acquisition date, reference should be made to the Consolidation scope section of the notes to the consolidated financial statements. The transaction became effective on 12 October 2022 and the consideration paid to acquire the business amounted to USD34 million. The contingent consideration of up to USD4 million is due if certain EBITDA milestones are reached. The Sale & Purchase Agreement also provides for an earn-out mechanism for Senva management based on the acquiree's results achieved up until 31 December 2025.
At the acquisition date, the acquiree had 65 employees.
2022 was affected by the Russia-Ukraine conflict, which is still ongoing and has somewhat reduced the expectations of growth mainly for the Eurozone. The group operates in Russia and Ukraine with two commercial companies. However, exposure in both markets is limited and consolidated revenue in both areas is less than 5% of the total. At the reporting date, the impact of the conflict on the group's financial performance was not serious nor was it required to impair its current assets. The group's non-current assets are not significant either in absolute value or as a percentage of the group's non-current assets.
The Covid-19 pandemic did not have a significant effect on the group's operations or performance in 2022. The Chinese group company was affected by several lockdowns but was, however, able to continue to operate and make its customary contribution to the group's production.
On 6 May 2022, the parent placed two ten-year non-convertible bond issues with a nominal amount of €20,000 thousand each maturing in May 2032 and with a five-year interest-only period. The two transactions are part of a private shelf agreement whereby the parent can ask Prudential Insurance Company of America ("Pricoa"), on an uncommitted basis and over the next three years, to subscribe additional bonds up to a total of USD150 million. The bonds are guaranteed by the parent and certain subsidiaries.
Fixed interest accrues on these bonds from the subscription date and repayment of principal will take place annually starting from the fifth year on a straight-line basis, with the first and last payment dates in May 2028 and May 2032, respectively.
The bonds are unrated and will not be quoted on regulated markets.
In June 2022, the parent distributed dividends of €14,995 thousand, in accordance with the shareholders' resolution of 22 April 2022.
The main performance figures for 2022 compared to the previous year are as follows:
| (in migliaia di euro) | 2022 | 2021 | Variation | Variation % |
|---|---|---|---|---|
| EBITDA1 | 111,725 | 85,302 | 26,423 | 31.0% |
| Adjusted EBITDA | 114,743 | 88,222 | 26,521 | 30.1% |
| OPERATING PROFIT | 87,311 | 64,457 | 22,853 | 35.5% |
| PROFIT FOR THE YEAR | 64,799 | 49,088 | 15,710 | 32.0% |
2022 EBITDA amounts to €111.7 million equal to 20.5% 2 , of revenue, up €26.4 million from €85.3 million for the previous year (when it was equal to 20.3% of revenue). This improvement is mostly a result of the higher business volumes in all geographical segments, which partly offset the rise in the cost of purchasing raw materials caused by inflation and shortages, seen throughout the year. The acquirees contributed roughly €7.5 million to the group's EBITDA.
Net of non-recurring effects, which accounted for around €3.0 million (€2.9 million in 2021) and related to costs incurred for M&A activities, adjusted EBITDA would have come to €114.7 million, equal to 21.1% of revenue compared to 21.0% in 2021.
The profit for the year came to €64.8 million, up 32.0% on the previous year. It is equal to 11.9% of revenue compared to 11.7% for 2021.
1 The group calculates EBITDA as the sum of the profit before tax, the gain or loss on equity-accounted investments, exchange differences, net financial income (expense), amortisation, depreciation and impairment losses. It uses EBITDA to assess its operating performance.
2 The EBITDA ratio is the ratio of EBITDA to revenue.
| The main financial position indicators at 31 December 2022 and 2021 are as follows: | |||||
|---|---|---|---|---|---|
| (thousands of Euros) | 31.12.2022 | 31.12.2021 | Variation | Variation % | |
| Non-current assets 3 | 300,499 | 230,338 | 70,161 | 30.5% | |
| Working capital 4 | 89,926 | 55,591 | 34,334 | 61.8% | |
| Defined benefit plans | (8,129) | (8,612) | 483 | (5.6%) | |
| Net invested capital 5 | 382,296 | 277,317 | 104,979 | 37.9% | |
| Equity | 221,247 | 169,875 | 51,372 | 30.2% |
Non-current assets amount to €300.5 million, up by €70.2 million from €230.3 million at the previous year end, mostly due to the acquisitions made during the year which led to the recognition of intangible assets of approximately €53 million as a result of the PPA procedure. Reference should be made to the notes to the consolidated financial statements for more information.
Put & call options 65,208 49,602 15,607 31.5% Net financial debt 95,841 57,841 38,000 65.7% Total 382,296 277,317 104,979 37.9%
Net of right-of-use assets, the group's investments amount to €26.8 million compared to €18.6 million in 2021. The group made large outlays to complete and start up Carel Adriatic's second production site and to build a new knowledge centre and a new office block for the parent. Carel Shozou and Recuperator invested heavily in equipment and machinery, disbursing approximately €1.1 million and approximately €2.8 million, respectively. The investments in intangible assets, mostly made by the parent, amount to €4.5 million and related principally to the roll-out of the Product Lifecycle Management (PLM) project for one product family, which will gradually be extended to the group's other product families.
Amortisation and depreciation, including the effects of the application of IFRS 16, totalled €24 million in 2022 compared to €20.8 million in 2021 (-€4 million). This includes €5.6 million related to the PPA procedure.
3 Net non-current assets is the sum of property, plant and equipment, intangible assets, equity-accounted investments and other non-current assets less other non-current liabilities
5 Net invested capital is the sum of (i) net non-current assets, (ii) net working capital and (iii) defined benefit plans.
4 Net working capital is the sum of trade receivables, inventories, tax assets, other current assets, deferred tax assets, trade payables, current tax liabilities, other current liabilities, deferred tax liabilities and provisions for risks.
December 2022, driven mainly by higher volumes which, in turn, drove up inventories (+€15.9 million) and trade receivables (+€9.8 million) only partly offset by the rise in trade payables (+€6.7 million).
Inventories grew considerably as part of the group's procurement policy to resolve shortages of certain components and to ensure production levels in line with market demand, as well as the generalised hike in purchase prices.
Trade receivables and payables both increased strongly, mostly as a reflection of the upturn in business volumes.
The acquisitions made during the year contributed €10 million to the increase in net working capital.
Non-current liabilities relate to the call options for CFM and Sauber. The increase in this caption reflects the liability recognised for the earn-out mechanism for the managers of Senva (see the Consolidation scope section in the notes to the consolidated financial statements for more information.
Net financial debt increased by €38.0 million from €57.8 million at 31 December 2021 to negative €95.8 million. Net bank loans and borrowings performed similarly, going from €28.8 million to €53.4 million at the reporting date. During the year, the group disbursed cash of around €42.9 million (net of cash acquired) for its acquisitions and €18.2 million to pay dividends (including to non-controlling investors). Financial liabilities assumed with the acquisitions approximated €6.3 million (including lease liabilities of around €4 million) while the group also recognised financial liabilities of roughly €8.8 million incurred in relation to the acquisitions. Lease liabilities increased by approximately €5 million and mostly refer to leases agreed for the new buildings built at the parent's premises. Reference should be made to the statement of cash flows for more information on the cash flows for the year.
A breakdown of net financial debt is as follows:
| (thousands of Euros) | 31.12.2022 | 31.12.2021 |
|---|---|---|
| Non-current financial liabilities | 94,177 | 70,180 |
| Current financial liabilities | 78,526 | 61,213 |
| Non-current lease liabilities | 27,216 | 23,520 |
| Current lease liabilities | 5,434 | 4,037 |
| Cash and cash equivalents | (96,636) | (100,625) |
| Current financial assets | (12,875) | (483) |
| Net financial debt | 95,841 | 57,841 |
| Net financial debt excluding the effects of IFRS 16 | 63,191 | 30,285 |
| Net bank loans and borrowings | 53,390 | 28,845 |
The net financial debt is mainly comprised of:
The group complied with the financial covenants provided for in its loan agreements.
At 31 December 2022, over 50% of cash and cash equivalents and current financial assets were held by Italian group companies and approximately 15% by the Chinese subsidiary. The remaining amount was split among the other group companies.
| INDEX | 2022 | 2021 |
|---|---|---|
| ROS 6 | 16.0% | 15.3% |
| ROI 7 | 22.8% | 23.2% |
| ROE 8 | 29.3% | 28.8% |
| ROA 9 | 13.6% | 12.7% |
| Inventory turnover 10 | 2.7 | 2.9 |
| Average DSO 11 | 56 | 58 |
| Average DPO 12 | 81 | 82 |
| Group tax rate 13 | 22.3% | 19.6% |
| R&D investments 14 | 20,002 | 19,034 |
| R&D as % of revenue 15 | 3.8% | 4.5% |
| Capex as % of revenue 16 | 4.9% | 4.4% |
| Cash conversion rate 17 | 40.8% | 60.3% |
| CASH FLOWS FROM OPERATIONS (INDIRECT METHOD) | ||||
|---|---|---|---|---|
| (thousands of Euros) | 2022 | 2021 | ||
| Profit for the year | 64,799 | 49,088 | ||
| Profit for the year net of amortisation, depreciation and impairment losses, provisions, net financial (income) expense, income taxes and (gains)/losses on the sale of non current assets |
111,673 | 84,158 | ||
| Cash flows before changes in net working capital | (24,764) | (15,083) | ||
| Interest and income taxes paid | (17,497) | (14,957) | ||
| Net cash flows from operating activities | 69,411 | 54,118 | ||
| Cash flows used in investing activities | (79,664) | (41,783) | ||
| Increase (decrease) in share capital | - | - | ||
| Sales (acquisitions) of equity investments | (0) | - | ||
| Dividends to owners of the parent and non-controlling investors | (18,263) | (11,988) | ||
| Cash flows from (used in) financing activities | 24,477 | (6,996) | ||
| Change in cash and cash equivalents | (4,038) | (6,648) | ||
| Opening cash and cash equivalents | 100,675 | 107,273 | ||
| Closing cash and cash equivalents | 96,637 | 100,625 |
Net cash flows from operating activities increased to €69.4 million from €54.1 million for the previous year, mainly as a result of the higher turnover.
Overall, the group used cash flows of €4.0 million after distributing dividends of €18 million and making investments of €79.7 million.
The parent, Carel Industries S.p.A., has its offices at the main production site in Brugine (Padua).
The parent manufactures and markets products which it distributes to the end customers in the markets it manages directly (mostly Italy) and its foreign subsidiaries in the markets they manage.
The parent provides centralised treasury services to the group and the European companies have a cash pooling system in which it acts as pooler. At year end, it had financial assets of €9.8 million and financial liabilities of €9.7 million related to the cash pooling account. During the year, it injected USD28 million into Carel USA Inc for a future capital increase to provide the subsidiary with the resources necessary to acquire Senva Inc.
In 2022, Carel set up the domestic tax consolidation scheme for IRES purposes for the 2022-2024 period in accordance with article 117 and following articles of the Consolidated Income Tax Act. Its subsidiaries Recuperator S.p.A., Enginia S.r.l. and CRC S.r.l. joined the scheme under separate master agreements with the parent.
The parent's net financial debt amounts to negative €112.2 million (31 December 2021: negative €91.6 million).
As already described, the parent placed two non-convertible bond issues of €20 million each, subscribed by Pricoa.
It distributed dividends of €15.0 million to its shareholders during the year.
| CAREL INDUSTIRES S.P.A. | ||||
|---|---|---|---|---|
| (thousands of Euros) | 2022 | 2021 | Variation % | |
| Revenue from third parties | 130,337 | 118,227 | 10.2% | |
| Intragroup revenue | 118,293 | 97,198 | 21.7% | |
| Other revenue | 9,699 | 7,448 | 30.2% | |
| Operating costs | (225,189) | (191,320) | 17.7% | |
| EBITDA | 33,140 | 31,553 | 5.0% | |
| Amortisation, depreciation and impairment losses | (9,085) | (8,525) | 6.6% | |
| Operating profit | 24,055 | 23,028 | 4.5% | |
| Net financial income | 26,078 | 8,903 | 192.9% | |
| Profit before tax | 50,133 | 31,931 | 57.0% | |
| Income taxes | (5,625) | (4,613) | 21.9% | |
| Profit for the year | 44,508 | 27,318 | 62.9% |
The parent's key figures are summarised below.
The parent performed well in 2022; revenue from third parties amounts to €130.3 million up by 10.2% on the previous year. Intragroup revenue increased by 21.7%.
Other revenue mainly consists of royalties from group companies for know-how licences and tax assets for R&D activities as provided for by national laws.
The increase in other operating costs is mainly due to higher costs to purchase raw materials and semi-finished products and personnel expense.
The number of employees increased from 697 at the end of 2021 to 725 at the reporting date.
Financial income includes dividends of €28.8 million (2021: €9.1 million) received from foreign companies, mainly the Chinese, Turkish and German subsidiaries.
The reclassified statement of financial position as at 31 December 2022 compared with the previous year end is as follows:
| CAREL INDUSTIRES S.P.A. | ||||
|---|---|---|---|---|
| (thousands of Euros) | 31.12.2022 | 31.12.2021 | Variation % | |
| Non-current assets | 249,800 | 198,701 | 25.7% | |
| Working capital | 13,934 | 12,203 | 14.2% | |
| Defined benefit plans | (4,390) | (4,969) | -11.7% | |
| Net invested capital | 259,344 | 205,935 | 25.9% | |
| Equity | 138,025 | 106,369 | 29.8% | |
| Other liabilities for call option | 9,104 | 7,924 | 14.9% | |
| Net financial debt | 112,215 | 91,642 | 22.4% | |
| Total coverage | 259,344 | 205,935 | 25.9% |
The increase in non-current assets is mainly due to:
Working capital increased, mostly as a result of the increase in inventories and trade receivables (from €25.1 million to €31.2 million and from €48.8 million to €53.6 million, respectively), only partly offset by the rise in trade payables from €52.4 million to €61.9 million. The variations are principally driven by the higher business volumes.
Lastly, the net financial debt amounts to €112,2 million at 31 December 2022, comprising cash and cash equivalents and financial assets of €77,4 million, offset by financial liabilities of €190.0 million, including lease liabilities of €15.7 million.
The reconciliation of the parent's and group's equities at 31 December 2022 is provided below:
| 31.12.2022 | 31.12.2021 | ||||
|---|---|---|---|---|---|
| (thousands of Euros) | Equity | Profit for the year |
Equity | Profit for the year |
|
| Carel Industries S.p.A. | 140,966 | 47,510 | 106,369 | 27,318 | |
| Profit and equity of consolidated companies | 250,644 | 55,154 | 175,146 | 38,627 | |
| Elimination of the carrying amount of investments in consolidated companies |
(273,077) | (395) | (174,364) | (915) | |
| Elimination of intragroup dividends | - | (29,031) | - | (9,140) | |
| Elimination of intragroup profits on inventories | (13,196) | (4,071) | (9,124) | (2,687) | |
| Purchase price allocation | 153,967 | (4,675) | 107,035 | (3,015) |
| 31.12.2022 | 31.12.2021 | ||||
|---|---|---|---|---|---|
| (thousands of Euros) | Equity | Profit for the year |
Equity | Profit for the year |
|
| Other adjustments | (53,925) | (2,368) | (49,990) | (1,009) | |
| Carel Industries Group | 205,378 | 62,124 | 154,951 | 49,059 |
Other adjustments mostly relate to the fair value measurement of the call option for 49% of CFM and 30% of Sauber (€52.4 million and €1.2 million, respectively). More information is provided in the Consolidation scope section of the notes to the consolidated financial statements.
There were no fatal injuries during the year, continuing the trend of previous years. One of the parent's employees applied for occupational disease from one of its employees which the relevant ministerial body did not accept after a scrupulous review of the requested documentation.
In 2022, 11 (eleven) minor events were reported in the workplace (five involving employees and six involving temporary workers), which led to their time off work. No injuries during the commute to and from work using transport organised by the group took place during the year. There was an almost 13% reduction in the injury frequency rate (employees and other workers) although the total number of hours worked increased by 5% in 2022. A comparison with the average trend of the last three years shows a decrease of 7.6%.
The group did not receive any complaints nor was it ordered to appear in court for alleged violations of occupational health and safety regulations or environmental crimes in 2022.
During 2022, Carel Industries S.p.A. confirmed its ISO 45001:2018 health and safety certification and ISO 14001:2015 environmental certification. The Recuperator Group companies also obtained certification and 37% of the group's production sites (2022 scope), representing a surface area equal to 45% of the total (76,700 square metres) now have health and safety certification, covering almost 52% of the personnel at such sites.
During the year, the group continued and revisited dedicated structural, organisational and behavioural measures at its sites to curb the spread of Covid-19 and protect its employees' health.
More information about this is available in its consolidated non-financial statement (NFS) prepared pursuant to Legislative decree no. 254/16.
The group's growth, also in terms of the total number of employees, continued in 2022. At year end, a breakdown of the group's employees by geographical segment is as follows:
| 31.12.2022 | 31.12.2021 | Variation | |
|---|---|---|---|
| Europe, Middle East and Africa | 1,652 | 1,353 | 299 |
| APAC | 357 | 328 | 29 |
| North America | 232 | 136 | 96 |
| South America | 58 | 48 | 10 |
| Total | 2,299 | 1,865 | 434 |
The recently acquired companies have made a significant contribution to the size of the group's workforce; however, employee numbers grew considerably also using the same consolidation scope as that of the previous year:
| 31.12.2022 | 31.12.2021 | Variation | |
|---|---|---|---|
| Europe, Middle East and Africa | 1,430 | 1,353 | 77 |
| APAC | 357 | 328 | 29 |
| North America | 161 | 136 | 25 |
| South America | 58 | 48 | 10 |
| Total | 2,006 | 1,865 | 141 |
Blue and white collars account for 40% and 60%, respectively, as shown in the table below:
| 2022 | ||||
|---|---|---|---|---|
| Total | % | |||
| Managers | 69 | 3% | ||
| White collars | 1,315 | 57% | ||
| Blue collars | 915 | 40% | ||
| Total | 2,299 | 100% |
The group continued to expand its organisation in 2022, with an increased percentage of its workforce involved in operating processes, principally to support the group's production capacity.
Overall, the group hired 420 resources, of whom 37% were women, while 279 left, of whom 66% were men, and a good number of whom had reached retirement age.
This additional surge in the group's growth in terms of its organisation and number of employees is due to the acquisitions made during the year in line with its stated policies designed to achieve its development objectives.
The trend seen in recent years with rather high turnover levels, especially at the production sites, has continued in a very competitive global labour market, especially for highly-qualified resources. The NFS prepared pursuant to Legislative decree no. 254/16 (to which reference should be made) has a detailed description of the group's talents retention and attraction policies pursued in 2022.
Training of one of the key tools for developing the group's business strategy. It is absolutely fundamental given the rapidly developing markets and technologies of the HVAC/R segment.
Therefore, in order to ensure the utmost professionalism within all company areas, the group has always implemented top-class employee training and development programmes. In 2022, a total of 39,408 hours of training were provided at the various offices (excluding the companies acquired in 2022).
The group's ongoing financial and organisational resources dedicated to training programmes meant it provided a total of 22,883 hours of training to white collars and 16,525 hours to production personnel.
Its training courses focused on operations, with 32% of the total hours dedicated to this area in 2022. Other aspects covered were efficient communications, lean principles and methodologies, health, safety and the environment (HSE), technical training about software, hardware, firmware and mechanical, project and management aspects.
More information about the group's training initiatives is provided in the non-financial statement prepared pursuant to Legislative decree no. 254/16, to which reference should be made.
The group's HR offices and representatives of the trade unions at the group's sites in Italy and abroad worked together with positive results during the year.
Specifically, although the state of emergency declared with the outbreak of Covid-19 is now officially over, the group maintained the Covid-19 committee set up when the pandemic started at its headquarters, which is also its main production site, in 2022. The committee comprises the HR manager, HSE manager, trade union representatives, safety representatives and the company doctor. Its tasks are to regularly update the employee healthcare protocol adopted by the parent, assess the best policies for employee access to offices (via a balanced mix of in-person and remote working) and provide policies and guidelines to be used as standards at group sites and companies abroad in compliance with local regulations and the ruling legislation of each country.
Attesting the positive labour relations is the fact that just four days of strikes were called in 2022, all linked to actions organised by trade unions at national level (about occupational safety and the budget act). The average participation rate was 13.4%. In March 2022, the agreement to renew the supplementary internal agreement (second level collective bargaining) for the 2022-2024 three-year period was signed. It again covers flexibility, more welfare and other benefits for employees and guarantees the full tax deductibility of the entire performance bonuses, to provide workers with an additional economic benefit in line with the tax regulations in force.
The unionisation rate at group level also remained very low, proving that "direct" industrial relations, i.e., without the arbitration of an internal or external trade union representative, are often preferred, especially at local level.
Half of the group employees were covered by collective bargaining agreements in 2022 while the other 50% are hired with company or individual contracts in line with the local regulations and market practices, the group's code of ethics and its human rights, diversity and HSE policies.
The atmosphere at the group remained largely harmonious via constructive and transparent collaboration approach. In this regard, there were two individual cases in 2022 that led to trade union disputes at Carel South America's production sites. One of them has been found to be groundless while the other one is being analysed. In addition, one complaint about discrimination was reported at Carel USA, which was subsequently found to be non-existent. Overall, there is a very low level of litigation within the group.
The group has always put R&D at the centre of its business to retain its leadership position in the HVAC/R market, ensure its competitive edge and provide customers with technologically innovative solutions at advantageous prices.
The development teams continue to focus on solutions for more energy efficient products and the possibility to use natural refrigerants. The cost of refrigerants in Europe is sky-rocketing due to the restrictions on those with the greatest environmental impact.
Services also increased both in the field, bolstered by the group's expertise in the various applications offered, and online with digital services to collect information from the systems used to write reports and descriptive analytics that improve and optimise management of refrigeration and conditioning systems.
Currently the R&D unit comprises the three digital, Knowledge Centre and humidification divisions and the electronics, mechanics and software tools competence centres.
During the year, the group set up a air treatment and heat exchange division which includes Recuperator, Enginia and Kkingenburg, which will become the fourth division of the R&D department and will specialise in indoor air quality.
Also in 2022, the software tools area became part of the IoT division, which changed its name to the digital division, with a greater focus on product programming systems to support the application development of the algorithms used in the group customers' applications.
The new R&D department includes the electronics and mechanics areas, specialised in micromechanics to develop motorised expansion valves, the development of cases for the electronics and the development of thermodynamic modules for refrigeration which will lead to the launch of the HEOSbox modules.
In 2022, the R&D unit had an average of 243 employees (including 150 at the parent, 14 in the US, 52 in China, five at HygroMatik GmbH, four at Recuperator, two at Klingenburg and 16 at Senva) who are very qualified and have a high educational level (roughly two thirds are university graduates).
R&D costs (personnel expense, opex and capex) equalled 3.8% of turnover and amounted to €20.0 million 18 up on the previous year (+5.3%).
Recuperator's integration continued during the year with greater involvement in the group's development process, the use of lean tools (visible planning, barashi, issue boards, A3-T), the harmonisation of certification processes for product, materials, design, simulation and test tools and methods. Enginia commenced a similar journey.
The group focused especially on honing development skills at the other global development sites through the systems managers to improve its ability to meet group design requirements. It maintained its development processes, methods and standards and circulated them throughout the group to be used as a basis for all design activities and guarantee identical quality levels at each site. A production part approval process (PPAP) was established for suppliers of materials, in particular of customised materials, in order to improve the quality in terms of both the design and the reliability of the production flows. This will improve the reliability of the supply flows, with the resulting improvements in logistics and quality. Similarly, the group reinforced its production part approval process regarding customers, exploiting the market's move to using flammable refrigerants, investigating FEMEA techniques on products and the production process, in addition to formalising the process flow and process control plan.
18 Actual costs for the in-scope companies at 1 January 2022.
The group confirmed its modular approach to product development in the various areas (electronic, mechanical and software) to encourage as far as possible the re-use and re-usability of the modules and thus reduce development times, achieve greater reliability and reduce product costs.
It successfully introduced a customisation management process, supported by a product lifecycle management (PLM) software to make development activities more efficient, simplify product configuration and customisation thus boosting its business (enhancing the very modular structure and configuration and customisation flexibility provided for in the production lines). The intention is to achieve greater integration between the product engineering and industrialisation activities and to structure information flows among the different group sites where the products are development. The feedback has been very positive with product customisation and configuration times of less than one business day.
Furthermore, R&D activities are also developed through long-standing partnerships with the Padua University, Udine University, Milan Politecnico University, the Danish Technological Institute, the Fraunhoffer Institute and the SMACT Competence Centre (in areas ranging from analogue and digital electronics, evolved calculation design, power electronics to the theory of systems and controls, thermodynamic applications, technical physics and mechanical production processes), CNR (National Research Institute) and the most important sector associations, such as EPEE (European Partnership for Energy and the Environment), AICARR (Italian Association of Air conditioning, Heating and Refrigeration), ASHRAE (American Society of Heating and Air-Conditioning Engineers), AHRI (Air-Conditioning, Heating and Refrigeration Institute), EHPA (European Heat Pump Association), CRAA (Chinese Refrigeration and Air Conditioning Industry Association) and CAR (Chinese Association of Refrigeration).
During the year, four guiding tenets underpinned product development projects:
The four guiding tenets led to:
Product development activities were hugely affected by the Covid-19 pandemic again in 2022. The lack of electronic components made it necessary to partly redesign some product groups to ensure their availability on the market. Fundamental to this chip pivoting was the speed required, and the group mobilised its best resources for this very delicate process in order to ensure product quality in an urgent situation where the group's customers' validation availability was also limited.
During the year, it completed development of the new range of iJ refrigeration controls. This range features highly appealing aesthetics, can easily be integrated into the refrigeration units and its design, parameters and functionalities are very adaptable. The new platform has excellent connectivity (BLE, NFC), is highly integrated with the controller systems, compatible with flammable refrigerants and very resistant to polluting agents.
The group markets iJF for food storage & display for the HO.RE.CA. market, iJM for merchandisers (bottle coolers, ice cream chest freezers and commercial cabinets) and iJS for scientific and medical applications.
The latter have back-up batteries to ensure the temperature of the drugs can be monitored during power outages.
It extended the iJ application to include a version that can be used in particularly hostile environments (in terms of dust and humidity) designed for commercial refrigeration in professional kitchens.
The HRV Heat Recovery & Ventilation applications were covered with a special application based on the aCU family. This family was also extended to packaged applications for industrial refrigeration, thus extending the number of applications covered with a modular approach.
The group launched the io.module product to replace its predecessor which had reached the end of its life cycle.
It also extended the STone development environment, laying the foundations for its use in the programmable c.pCO controller families as well as the iJ and aCU families.
In 2022, the group completed the retrofitting of some product families (unit controllers and compressor drives) for use with both A2L and A3 (propane) flammable refrigerants, with the extension of the characteristic to pressure sensors and E2V expansion valves that have a lower global warming potential, a trend that is gaining ground in the HVAC and refrigeration markets. The group optimised the E2V electronic expansion value family with the use of plastic stems (replacing the metal ones) and extended its functioning up to pressures suitable to operate with CO2. During the study phase, the group developed a version of the valves for high cooling capacity CO2 applications, similar to the E4VC and E5VC sizes.
Again with respect to the natural refrigerants, and especially the flammable refrigerants like propane R290, the group introduced the new GLD small gas leakage sensor, widely used in systems to signal gas leaks to protect user health and safety.
The family of inverters for variable speed compressors has been extended with a PSD2 version, which can also be used for the 35/40A output current family, thus completing the PSD2 range, characterised by intrinsic machine safety functions in the inverter, thus allowing the beginning of the phase out of the old PSD1 family.
The HEOS BOX system for food retail water loop systems using the CFO refrigerants was completed and launched on the market. This solution is aimed at facilitating the HEOS water loop system's market penetration by directly supplying the finished refrigeration module with a data connection and REDoptimize data analysis system, as well as electronic systems for OEMs that prefer to develop the refrigeration units themselves.
RED Optimize is the next generation Cloud portal dedicated to Retail applications. The group upgraded its with functionalities to simplify its configuration by customers as well as its better performance in the case of frequent disconnections. It is promoted as a service for contractors and retailers.
The gateway family has been extended to include the low range gateway, Cloud gate mini, suitable for individual installation.
With respect to the adiabatic humidification area, the group continued to renew the Humifog product range to include a touch screen version, with optimised features that allow the product's easier installation, application management and information about water and energy consumption. The high range version of the touch screen product also facilities a more user-friendly and complete visibility of the system.
The working range of the GaSteam gas isothermal humidifier has been extended to -40°C to meet the requirements of countries with very low winter temperatures. The UR resistive humidifiers have been certified for seismic areas in California, so they can be sold there.
Chillbooster, which extends the use of commercial refrigeration systems by compensating for the increase in ambient temperatures caused by global warming, was upgraded with an alarm relay to facilitate its integration with monitoring and alarm systems.
The humidifier products were complemented by WTS (Water Treatment System)reverse osmosis systems, where the use of demineralised water is absolutely necessary.
The heat exchanger family for air treatment applications was extended to include a rotary heat exchange family, designed and manufactured by Recuperator, and a plastic plate heat recovery unit family for particularly difficult applications such as data centres, where evaporative cooling, using water, requires high resistance to corrosion over time.
Six new patents were added to the group's portfolio in 2021 and 2022, bringing the total to 61 invention patents (approved - filed) and 34 utility patents.
No significant events have taken place after the reporting date. However, the following are worthy of attention:
The strong geopolitical instability that characterised 2022 was mainly caused by the Russia-Ukraine war which broke out in an already complicated situation after two years of the Covid-19 pandemic and significant tensions in the global supply chain. These events triggered inflationary pressures not seen for decades (Eurozone +9.2%, US +8.0%). The repercussions are not easily decipherable but may hold back global growth in 2023.
Turning to Carel, the data centres and indoor air quality segments continue to grow strongly and the heat pump segment is also very dynamic, bolstered by the global megatrends of energy efficiency and electrification as well as, in Europe, the need to limit its reliance on gas. The refrigeration segment is increasingly sensitive to macroeconomic change and may grow at a slower pace in the short term compared to the last few years, although this segment is also subject to secular trends led by stringent regulations (e.g., F-gas in Europe).
at 31 December 2022
| (thousands of Euros) | Note | 31.12.2022 | 31.12.2021 |
|---|---|---|---|
| Property, plant and equipment | 1 | 109,687 | 84,403 |
| Intangible assets | 2 | 181,645 | 134,570 |
| Equity-accounted investments | 3 | 1,446 | 1,250 |
| Other non-current assets | 4 | 9,769 | 10,407 |
| Deferred tax assets | 5 | 7,745 | 7,022 |
| Non-current assets | 310,292 | 237,652 | |
| Trade receivables | 6 | 93,692 | 74,455 |
| Inventories | 7 | 106,745 | 80,907 |
| Current tax assets | 8 | 2,777 | 3,886 |
| Other current assets | 9 | 17,446 | 9,788 |
| Current financial assets | 10 | 12,875 | 483 |
| Cash and cash equivalents | 11 | 96,636 | 100,625 |
| Current assets | 330,172 | 270,144 | |
| TOTAL ASSETS | 640,464 | 507,796 | |
| Equity attributable to the owners of the parent | 12 | 205,378 | 154,952 |
| Equity attributable to non-controlling interests | 13 | 15,868 | 14,923 |
| Total equity | 221,247 | 169,875 | |
| Non-current financial liabilities | 14 | 121,392 | 93,700 |
| Provisions for risks | 15 | 4,451 | 2,157 |
| Defined benefit plans | 16 | 8,129 | 8,612 |
| Deferred tax liabilities | 17 | 18,242 | 17,110 |
| Other non-current liabilities | 18 | 67,256 | 49,894 |
| Non-current liabilities | 219,471 | 171,473 | |
| Current financial liabilities | 14 | 83,960 | 65,250 |
| Trade payables | 19 | 77,174 | 66,444 |
| Current tax liabilities | 20 | 4,987 | 4,775 |
| Provisions for risks | 15 | 1,401 | 1,907 |
| Other current liabilities | 21 | 32,226 | 28,073 |
| Current liabilities | 199,747 | 166,449 | |
| TOTAL LIABILITIES AND EQUITY | 640,464 | 507,796 |
| (thousands of Euros) | Note | 2022 | 2021 |
|---|---|---|---|
| Revenue | 22 | 544,852 | 420,418 |
| Other revenue | 23 | 5,780 | 5,779 |
| Costs of raw materials, consumables and goods and changes in inventories | 24 | (248,838) | (190,138) |
| Services | 25 | (70,234) | (51,034) |
| Capitalised development expenditure | 26 | 705 | 1,249 |
| Personnel expense | 27 | (118,425) | (99,379) |
| Other expense, net | 28 | (2,115) | (1,594) |
| Amortisation, depreciation and impairment losses | 29 | (24,414) | (20,844) |
| OPERATING PROFIT | 87,311 | 64,457 | |
| Net financial expense | 30 | (3,173) | (2,355) |
| Net exchange losses | 31 | (861) | (1,430) |
| Fair value loss on call option | 32 | (2,235) | (125) |
| Share of profit of equity-accounted investees | 33 | 2,360 | 508 |
| PROFIT BEFORE TAX | 83,402 | 61,055 | |
| Income taxes | 34 | (18,603) | (11,967) |
| PROFIT FOR THE YEAR | 64,799 | 49,088 | |
| Non-controlling interests | 2,675 | 29 | |
| PROFIT FOR THE YEAR ATTRIBUTABLE TO THE OWNERS OF THE PARENT | 62,124 | 49,059 |
| (thousands of Euros) | Note | 2022 | 2021 |
|---|---|---|---|
| Profit for the year | 64,799 | 49,088 | |
| Items that may be subsequently reclassified to profit or loss: | |||
| - Fair value gains on hedging derivatives net of the tax effect | 1,303 | 385 | |
| - Exchange differences | 2,011 | 6,639 | |
| Items that may not be subsequently reclassified to profit or loss: | |||
| - Actuarial gains (losses) on employee benefits net of the tax effect | 801 | (103) | |
| Comprehensive income | 68,914 | 56,009 | |
| attributable to: | |||
| - Owners of the parent | 66,223 | 55,880 | |
| - Non-controlling interests | 2,691 | 129 | |
| Earnings per share | |||
| Earnings per share (in Euros) | 12 | 0.62 | 0.49 |
| (thousands of Euros) | Note | 2022 | 2021 |
|---|---|---|---|
| Profit for the year | 64,799 | 49,088 | |
| Adjustments for: | |||
| Amortisation, depreciation and impairment losses | 29 | 24,415 | 20,844 |
| Accruals to/utilisations of provisions | 4,829 | 2,599 | |
| Non-monetary net expense | 3,511 | 1,358 | |
| Income taxes | 14,119 | 10,636 | |
| Gains on the sale of non-current assets | - | (367) | |
| Changes in working capital: | |||
| Change in trade receivables and other current assets | (15,241) | (11,887) | |
| Change in inventories | 7 | (19,136) | (22,020) |
| Change in trade payables and other current liabilities | 6,956 | 19,415 | |
| Change in non-current assets | 297 | (351) | |
| Change in non-current liabilities | 2,359 | (241) | |
| Cash flows from operating activities | 86,908 | 69,075 | |
| Net interest paid | (2,271) | (2,076) | |
| Income taxes paid | (15,226) | (12,881) | |
| Net cash flows from operating activities | 69,411 | 54,118 | |
| Investments in property, plant and equipment | 1 | (22,298) | (14,890) |
| Investments in intangible assets | 2 | (4,501) | (3,753) |
| Investments/Disinvestments of financial assets | 10 | (10,613) | 7,541 |
| Disinvestments of property, plant and equipment and intangible assets | 121 | 952 | |
| Interest collected | 497 | 81 | |
| Investments in equity-accounted investees | 3 | - | (27) |
| Business combinations net of cash acquired | 2 | (42,870) | (31,686) |
| Cash flows used in investing activities | (79,664) | (41,783) | |
| Capital increases | - | - | |
| Repurchase of treasury shares | - | - | |
| Dividend distributions | 12 | (14,995) | (11,988) |
| Dividends distributed to non-controlling interests | 13 | (3,268) | - |
| Increase in financial liabilities | 14 | 102,800 | 57,774 |
| Decrease in financial liabilities | 14 | (72,850) | (60,011) |
| Decrease in lease liabilities | 14 | (5,473) | (4,759) |
| Cash flows from (used in) financing activities | 6,214 | (18,984) | |
| Change in cash and cash equivalents | (4,038) | (6,648) | |
| Cash and cash equivalents - opening balance | 100,625 | 105,586 | |
| Exchange differences | 50 | 1,687 | |
| Cash and cash equivalents - closing balance | 96,636 | 100,625 |
| Share capital |
Legal reserve |
Translation reserve |
Hedging reserve |
Other reserves |
Retained earnings |
Profit for the year |
Equity | Equity att. to non controlling interests |
Total equity |
|
|---|---|---|---|---|---|---|---|---|---|---|
| Balance at 01.01.2021 | 10,000 | 2,000 | (2,686) | (436) | 56,530 | 58,795 | 35,112 | 159,317 | 304 | 159,621 |
| Owner transactions | ||||||||||
| Allocation of prior year profit |
- | - | - | - | 20,896 | 14,216 | (35,112) | (0) | - | (0) |
| Capital increases | ||||||||||
| Defined benefit plans | - | - | - | - | 818 | - | - | 818 | - | 818 |
| Dividend distributions | - | - | - | - | (11,988) | - | (11,988) | - | (11,988) | |
| Call options for non controlling interests |
(49,075) | (49,075) | (49,075) | |||||||
| Change in consolidation scope |
- | - | - | - | - | - | - | 14,490 | 14,490 | |
| Total owner transactions |
10,000 | 2,000 | (2,686) | (436) | 17,181 | 73,011 | - | 99,072 | 14,794 | 113,866 |
| Profit for the year | 49,059 | 49,059 | 29 | 49,088 | ||||||
| Other comprehensive income |
- | - | 6,539 | 385 | (103) | 6,821 | 100 | 6,921 | ||
| Comprehensive income |
- | - | 6,539 | 385 | (103) | 49,059 | 55,880 | 129 | 56,009 | |
| Balance at 31.12.2021 | 10,000 | 2,000 | 3,853 | (51) | 17,079 | 73,011 | 49,059 | 154,952 | 14,923 | 169,875 |
| Balance at 01.01.2022 | 10,000 | 2,000 | 3,853 | (51) | 17,079 | 73,011 | 49,059 | 154,952 | 14,923 | 169,875 |
| Owner transactions | ||||||||||
| Allocation of prior year profit |
- | - | - | - | 27,145 | 21,914 | (49,059) | - | - | - |
| Capital increases | - | - | - | - | - | - | - | |||
| Defined benefit plans | - | - | - | - | 408 | 408 | - | 408 | ||
| Repurchase of treasury shares |
- | - | - | - | - | - | - | - | ||
| Dividend distributions | - | - | - | - | (14,995) | - | (14,995) | (3,268) | (18,263) | |
| Call options for non controlling interests |
(1,207) | (1,207) | (1,207) | |||||||
| Change in consolidation scope |
- | - | - | - | - | - | - | 1,521 | 1,521 | |
| Total owner transactions |
10,000 | 2,000 | 3,853 | (51) | 28,430 | 94,925 | - | 139,158 | 13,176 | 152,334 |
| Profit for the year | 62,124 | 62,124 | 2,675 | 64,799 | ||||||
| Other comprehensive income | - | - | 1,995 | 1,303 | 801 | - | - | 4,099 | 16 | 4,115 |
| Comprehensive income |
- | - | 1,995 | 1,303 | 801 | - | 62,124 | 66,223 | 2,691 | 68,914 |
| Balance at 31.12.2022 | 10,000 | 2,000 | 5,848 | 1,252 | 29,232 | 94,925 | 62,124 | 205,378 | 15,868 | 221,247 |
Carel Industries S.p.A. (the "parent") heads the group of the same name and has its registered office in Via Dell'Industria 11, Brugine (PD). It is a company limited by shares and its tax code and VAT number is 04359090281. It is included in the Padua company register.
The group provides control instruments to the air-conditioning, commercial and industrial refrigeration markets and also produces air humidification systems. It has 37 commercial companies including fiveteen production sites which serve all the main markets.
As it is required to prepare consolidated financial statements, on 28 November 2016, the parent opted to draw up separate and consolidated financial statements starting from 31 December 2017 under the International Financial Reporting Standards (IFRS) endorsed by the European Union as per Regulation (EC) no. 1606/2002 of 19 July 2002, transposed into Italian law by Legislative decree no. 38/2005.
The parent's board of directors approved the consolidated financial statements at 31 December 2022 on 2 March 2023.
The consolidated financial statements include the results of the parent and its subsidiaries, based on their updated accounting records.
The Carel Industries Group's consolidated financial statements at 31 December 2022 were prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and endorsed by the European Commission with the procedure set out in article 6 of Regulation (EC) no. 1606/2002 of the European Parliament and of the Council of 19 July 2002.
The IFRS include all the standards as well as the interpretations of the International Financial Reporting Standards Interpretations Committee (IFRS IC), previously called the Standing Interpretations Committee (SIC), endorsed by the European Union at the reporting date and included in the related EU regulations published at that date.
The consolidated financial statements include the statement of financial position, statement of profit or loss, statement of comprehensive income, statement of changes in equity, statement of cash flows and these notes. They were prepared assuming the parent and its subsidiaries will continue as going concerns. The group deems that it could adopt a going concern assumption pursuant to IAS 1.25/26 given its strong market position, very satisfactory profits and solid financial structure.
The consolidated financial statements were prepared in thousands of Euro, which is the group's functional and presentation currency as per IAS 21. There may be rounding differences when items are added together as the individual items are calculated in Euro units.
Statement of financial position. Assets and liabilities are presented as current or non-current as required by paragraph 60 and following paragraphs of IAS 1.
An asset or liability is classified as current when it meets one of the following criteria:
All other assets and liabilities are classified as non-current.
Statement of profit or loss. The group has opted to present the statement of profit or loss classifying items by their nature rather than their function, as this best represents the transactions undertaken during the year and its business structure. This approach is consistent with the group's internal management reporting system and international best practices for its sector. Following adoption of revised IAS 1, the group decided to present the statement of profit or loss and other comprehensive income as two separate statements.
Statement of comprehensive income. This statement, prepared in accordance with the IFRS, presents other items of comprehensive income that are recognised directly in equity.
Statement of cash flows. The group prepares this statement using the indirect method. Cash and cash equivalents included herein comprise the statement of financial position balances at the reporting date. Interest income and expense, dividends received and income taxes are included in the cash flows generated by operating activities. The group presents cash flows from operating activities and investing activities and changes in non-current financial position, current liabilities and current financial assets separately. If not specified, exchange rate gains and losses are classified in the operating activities as they refer to the translation of trade receivables and payables into Euros.
Statement of changes in equity. This statement shows changes in the equity captions related to:
The consolidated financial statements include the separate financial statements and financial statements of the parent, Carel Industries S.p.A., and its Italian and foreign subsidiaries, respectively, at 31 December 2022.
Subsidiaries are those entities over which the parent has control, as defined in IFRS 10 Consolidated financial statements. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of the subsidiaries are consolidated starting from the date when control exists until when it ceases to exist.
Note [35] Other information lists the companies included in the consolidation scope at 31 December 2022.
On 15 April 2022, the parent acquired 30% of Arion S.r.l., in which it already held a 40% investment. The remaining 30% is owned by Bridgeport S.p.A.
Of this investment, 30% was acquired for a cash consideration of €1,626 thousand. As control was acquired in several stages, in compliance with the IFRS, the carrying amount of the existing investment was recalculated based on the fair value of the assets acquired, recognising a gain totalling €2,097 thousand in profit or loss.
The Carel Industries Group acquired control on 1 April 2022 and thus has included the investee in the consolidation scope since such date.
As the assets acquired and liabilities assumed are a business, the transaction is considered a business combination in accordance with IFRS 3. Allocation of the consideration is still provisional. The definitive allocation of the acquisition price will be made within 12 months of the acquisition.
| ARION S.R.L. | |||||
|---|---|---|---|---|---|
| (thousands of Euros) | Acquisition-date carrying amount |
Allocation | Acquisition-date fair value |
||
| Property, plant and equipment | 153 | 105 | 258 | ||
| Intangible assets | 21 | 2,302 | 2,323 | ||
| Deferred tax assets | 22 | - | 22 | ||
| Non-current assets | 196 | 2,407 | 2,603 | ||
| Trade receivables | 356 | - | 356 | ||
| Inventories | 174 | - | 174 | ||
| Other current assets | 109 | - | 109 | ||
| Cash and cash equivalents | 765 | - | 765 | ||
| Current assets | 1,404 | - | 1,404 | ||
| TOTAL ASSETS | 1,600 | 2,407 | 4,007 | ||
| Non-current financial liabilities | (160) | (105) | (265) | ||
| Provisions for risks | - | - | - | ||
| Defined benefit plans | (39) | - | (39) | ||
| Deferred tax liabilities | - | (642) | (642) | ||
| Non-current liabilities | (199) | (747) | (946) | ||
| Current financial liabilities | (34) | - | (34) |
The assets acquired and liabilities assumed are detailed below:
| Group 2022 Annual Report | CERTIFIED |
|---|---|
| (thousands of Euros) | Acquisition-date carrying amount |
Allocation | Acquisition-date fair value |
|---|---|---|---|
| Trade payables | (199) | - | (199) |
| Current tax liabilities | (194) | - | (194) |
| Other current liabilities | (43) | - | (43) |
| Current liabilities | (470) | - | (470) |
| TOTAL LIABILITIES | (669) | (747) | (1,416) |
When allocating the acquisition price, the group recognised €2,303 thousand attributable to technology, in addition to the relevant deferred tax. €1,980 thousand of the difference between the consideration paid, the assets acquired and the liabilities assumed was provisionally allocated to goodwill, calculated using the proportional method.
On 12 July 2022, the parent acquired 70% of Sauber S.r.l. for a cash consideration of €2,997 thousand, of which €300 thousand has been recognised as a financial liability as per the acquisition agreement as a warranty and to cover any possible contractual risks to be borne by the seller. The latter amount will be paid in instalments when certain contractually-agreed events occur. As meeting these conditions is deemed probable, management considers such amount an adjustment of the consideration paid at the acquisition date.
Furthermore, under the acquisition agreement, the interest held by the non-controlling investor is subject to mutual put and call options. Specifically, the parent can exercise its call option within 30 days of the approval of Sauber S.r.l.'s financial statements at 31 December 2024. The non-controlling investor's put option can be exercised within 30 days after the 30-day period granted to the parent should it not have exercised its call option. The consideration for both options is calculated using a specific multiple applicable to the investee's average gross operating profit over the three years prior to the year when the option is exercised and adjusted to take into consideration the investee's net financial position. The group measured the call option at its fair value at the acquisition date and remeasured it at the reporting date. The directors engaged an independent expert to determine such fair value by estimating the most probable scenario in which the option would be exercised, based on a high number of possible gross operating profit and equity value scenarios based respectively on the Bachelier and Black-Scholes frameworks. The present value of the liability is equal to its present value as per the 2022-2024 business plan in the most likely scenario.
The liability was discounted using a rate of 3.6%. It is remeasured at each subsequent reporting date with any fair value gains or losses taken to profit or loss. At 31 December 2022, the liability for the call option amounts to €1,227 thousand and is recognised under other non-current liabilities.
Given that the risks and rewards on the residual 30% remain attributable to non-controlling interests, the liability at the acquisition date reduced the equity attributable to the owners of the parent. The respective portions of gains and losses for the year are regularly allocated to the non-controlling interest.
The Carel Industries Group acquired control on 12 July and has thus included the investee in its consolidation scope.
As the assets acquired and liabilities assumed are a business, the transaction is considered a business combination in accordance with IFRS 3. Allocation of the consideration at 31 December 2022 is still provisional as provided for by IFRS 3.
The assets acquired and liabilities assumed are detailed below:
| SAUBER S.R.L. | |||||
|---|---|---|---|---|---|
| (thousands of Euros) | Acquisition-date carrying amount |
Allocation | Acquisition-date fair value |
||
| Property, plant and equipment | 281 | 287 | 568 | ||
| Intangible assets | 13 | 1,753 | 1,766 | ||
| Equity investments | 24 | - | 24 | ||
| Deferred tax assets | - | 42 | 42 | ||
| Non-current assets | 318 | 2,082 | 2,400 | ||
| Trade receivables | 1,581 | (150) | 1,431 | ||
| Inventories | 1,381 | - | 1,381 | ||
| Other current assets | 1,425 | - | 1,425 | ||
| Current tax assets | 95 | - | 95 | ||
| Current financial assets | - | - | - | ||
| Cash and cash equivalents | 1,338 | - | 1,338 | ||
| Current assets | 5,820 | (150) | 5,670 | ||
| TOTAL ASSETS | 6,138 | 1,932 | 8,070 | ||
| Non-current financial liabilities | (1,535) | (210) | (1,745) | ||
| Provisions for risks | - | - | - | ||
| Defined benefit plans | (392) | - | (392) | ||
| Deferred tax liabilities | - | (489) | (489) | ||
| Non-current liabilities | (1,927) | (699) | (2,626) | ||
| Current financial liabilities | (446) | (77) | (523) | ||
| Trade payables | (1,472) | - | (1,472) | ||
| Current tax liabilities | (375) | - | (375) | ||
| Other current liabilities | (597) | - | (597) | ||
| Current liabilities | (2,890) | (77) | (2,967) | ||
| TOTAL LIABILITIES | (4,816) | (776) | (5,592) |
When allocating the acquisition price, the group recognised €1,753 thousand attributable to customer lists, in addition to the relevant deferred tax. The difference of €1,264 thousand between the consideration paid, the assets acquired and the liabilities assumed was provisionally allocated to goodwill, calculated using the proportional method.
On 2 September 2022, the parent acquired 100% of Klingenburg GmbH (and its subsidiaries), based in Gladbeck (Germany), and Klingenburg International Sp. Z.o.o., based in Świdnica (Poland). The transaction was effective from that date and the parent disbursed consideration of €3,948 thousand and €11,845 thousand for the two companies, respectively.
At the reporting date, the group has recognised part of the consideration (€1,435 thousand) as a financial liability as per the acquisition agreement as a warranty and to cover any possible contractual risks to be borne by the seller. This amount will be paid in instalments when certain contractually-agreed events occur. As meeting these conditions is deemed probable, management considers such amount an adjustment of the consideration paid at the acquisition date.
Klingenburg GmbH wholly owns Klingenburg US, Klingenburg Uk and Klingenburg Iberica.
As the assets acquired and liabilities assumed are a business, the transaction is considered a business combination in accordance with IFRS 3. Allocation of the consideration is still provisional. The definitive allocation of the acquisition price will be made within 12 months of the acquisition.
The assets acquired and liabilities assumed are detailed below:
| GRUPPO KLINGENBURG | ||||||
|---|---|---|---|---|---|---|
| (thousands of Euros) | Acquisition-date carrying amount |
Allocation Acquisition-date fair value |
||||
| Property, plant and equipment | 3,951 | 3,555 | 7,506 | |||
| Intangible assets | 8 | - | 8 | |||
| Deferred tax assets | 41 | - | 41 | |||
| Non-current assets | 4,000 | 3,555 | 7,555 | |||
| Trade receivables | 4,587 | - | 4,587 | |||
| Inventories | 5,094 | - | 5,094 | |||
| Other current assets | 224 | - | 224 | |||
| Current tax assets | 81 | - | 81 | |||
| Cash and cash equivalents | 5,700 | - | 5,700 | |||
| Current assets | 15,687 | - | 15,687 | |||
| TOTAL ASSETS | 19,687 | 3,555 | 23,242 | |||
| Non-current financial liabilities | (7) | (729) | (736) | |||
| Provisions for risks | - | (1,874) | (1,874) | |||
| Defined benefit plans | (5) | - | (5) | |||
| Deferred tax liabilities | (40) | (403) | (443) | |||
| Non-current liabilities | (52) | (3,006) | (3,058) | |||
| Current financial liabilities | (110) | (705) | (815) | |||
| Trade payables | (1,885) | - | (1,885) | |||
| Current tax liabilities | (304) | - | (304) | |||
| Other current liabilities | (1,405) | - | (1,405) | |||
| Current liabilities | (3,704) | (705) | (4,409) | |||
| TOTAL LIABILITIES | (3,756) | (3,711) | (7,467) |
During the purchase price allocation procedure, the group allocated €2,121 thousand to property, plant and equipment and the related deferred taxes.
The fair value of the assets acquired and the liabilities assumed is greater than the consideration transferred. The difference of €1,874 thosuand has been provisionally allocated to the provision for risks and charges (€1,397 thousand for Klingenburg GmbH and its subsidiaries and €476 thousand for Klingenburg International S.p. z.o.o.).
On 12 October 2022, the subsidiary Carel US acquired 100% of the bussines of Senva Inc through a vehicle subsequently renamed Senva. The consideration was USD34 million, of which €2,830 million recognised under current and non-current financial liabilities as a warranty and to cover any possible contractual risks to be borne by the seller. The latter amount will be paid in instalments when certain contractually-agreed events occur. As meeting these conditions is deemed probable, management considers such amount an adjustment of the
consideration paid at the acquisition date. The acquisition agreement provides for contingent consideration of US4 million, for a potential total consideration of USD38 million, upon achievement of certain gross operating profit milestones. As this is deemed probable, management has recognised USD4 million under financial liabilities as a price adjustment.
The agreement also includes an earn-out mechanism for Senva's management team (which will remain after the acquisition) tied to results achieved up until 31 December 2025 and calculated as a multiple of the average gross operating profit from 2022 to 2025 less the initial consideration paid (assumed to be USD38 million).
The liability was measured at its fair value. The directors engaged an independent expert to determine such fair value by estimating the most probable scenario in which the option would be exercised, based on a high number of possible gross operating profit and equity value scenarios based respectively on the Bachelier and Black-Scholes frameworks. The present value of the liability is equal to the present value of the liability in the most likely scenario.
The liability was discounted using a rate of 4.5%. It is remeasured at each subsequent reporting date with any fair value gains or losses taken to profit or loss. At 31 December 2022, the liability amounts to €12,326 thousand and is recognised under other non-current liabilities.
As the assets acquired and liabilities assumed are a business, the transaction is considered a business combination in accordance with IFRS 3. Allocation of the consideration is still provisional. The definitive allocation of the acquisition price will be made within 12 months of the acquisition.
| SENVA INC | |||||||
|---|---|---|---|---|---|---|---|
| (thousands of Euros) | Acquisition-date carrying amount |
Allocation | Acquisition-date fair value |
||||
| Property, plant and equipment | 1,019 | 2,179 | 3,198 | ||||
| Intangible assets | 102 | 27,055 | 27,157 | ||||
| Other non-current assets | 83 | - | 83 | ||||
| Non-current assets | 1,204 | 29,234 | 30,438 | ||||
| Trade receivables | 3,000 | - | 3,000 | ||||
| Inventories | 2,530 | - | 2,530 | ||||
| Other current assets | 70 | - | 70 | ||||
| Current assets | 5,600 | - | 5,600 | ||||
| TOTAL ASSETS | 6,804 | 29,234 | 36,038 | ||||
| Non-current financial liabilities | (1,943) | (1,943) | |||||
| Non-current liabilities | - | (1,943) | (1,943) | ||||
| Current financial liabilities | - | (236) | (236) | ||||
| Trade payables | (375) | - | (375) | ||||
| Other current liabilities | (351) | - | (351) | ||||
| Current liabilities | (726) | (236) | (962) | ||||
| TOTAL LIABILITIES | (726) | (2,179) | (2,905) |
The assets acquired and liabilities assumed are detailed below:
During the purchase price allocation procedure, €5,594 thousand was allocated to the trademark, €5,409 thousand to technology and €16,052 thousand to customer lists. As these allocations are taxable under the
regulations in force, the related deferred tax was not recognised. The difference of €18,538 thousand between the consideration paid, the assets acquired and liabilities assumed was provisionally allocated to goodwill.
The consolidated financial statements include the separate financial statements and financial statements of Carel Industries S.p.A. and the Italian and foreign companies over which it has direct or indirect control, respectively. Specifically, the consolidation scope includes:
The parent adopted the following consolidation criteria:
The reporting date of all the consolidated companies is 31 December, except for Carel India, whose year end is 31 March. However, the Indian company prepares a reporting package at 31 December for consolidation purposes. The group monitors Carel India for any significant events between 31 December and 31 March, to identify possible adjustments.
Business combinations are treated using the acquisition method. The consideration is recognised at fair value, calculated as the sum of the acquisition-date fair values of the assets transferred and liabilities incurred by the acquirer and the equity interests issued in exchange for control of the acquiree. Transaction costs are usually recognised in profit or loss when they are incurred.
The assets acquired and the liabilities assumed are recognised at their acquisition-date fair value, except for the following items which are measured in line with the relevant IFRS:
Goodwill is calculated as the excess of the aggregate of the consideration transferred for a business combination, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of the acquirer's previously held equity interest in the acquiree and the net of the acquisition-date fair value of the assets acquired and liabilities assumed. If this fair value is greater than the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of the acquirer's previously held equity interest in the acquiree, the resulting gain is recognised immediately in profit or loss.
The amount of any non-controlling interest in the acquiree at the acquisition date is the pre-combination carrying amount of the acquiree's net assets.
Contingent consideration is measured at its acquisition-date fair value and included in the consideration exchanged for the acquiree to calculate goodwill. Any subsequent changes in fair value, which are measurement period adjustments, are included in goodwill retrospectively. Changes in fair value which are measurement period adjustments are those that arise due to additional information becoming available about facts and circumstances that existed at the acquisition date and was obtained during the measurement period (that cannot exceed one year from the acquisition date). Any subsequent change in contingent consideration is included in profit or loss.
The consolidated financial statements at 31 December 2022 were prepared in accordance with the IFRS issued by the IASB, endorsed by the European Commission and applicable at the reporting date. They are presented in Euros, which is the group's functional currency, i.e., the currency of the primary economic environment in which it mainly operates. Amounts are rounded to the nearest thousand.
The consolidated financial statements present the financial position and performance of the parent and its subsidiaries. The financial statements used for consolidation purposes are those prepared by the subsidiaries pursuant to the IFRS at 31 December 2022.
The consolidated financial statements include the statement of profit or loss, statement of comprehensive income, statement of financial position, statement of changes in equity, statement of cash flows and these notes, which are an integral part thereof.
They were prepared using the historical cost criterion, except for derivative financial instruments hedging currency and interest rate risks and available-for-sale financial assets, which were measured at fair value as required by IFRS 9 Financial instruments: recognition and measurement.
Preparation of consolidated financial statements under the IFRS requires management to make estimates and assumptions that affect the amounts in the financial statements and the notes. Actual results may differ from these estimates. Reference should be made to the "Use of estimates" section for details of the captions more
likely to be affected by estimates.
Following its decision to adopt the IFRS starting from the consolidated financial statements at 31 December 2017, the group referred to the standards applicable from 1 January 2017 to prepare its consolidated financial statements at 31 December 2022, in accordance with the provisions of IFRS 1.
The group applied the following standards, amendments and interpretations for the first time starting from 1 January 2022:
The adoption of these amendments did not affect the group's consolidated financial statements.
At the reporting date, the EU's relevant bodies had not yet completed the endorsement process for adoption of the following amendments and standards:
Revenue is measured based on the fee contractually-agreed with the customer and does not include amounts collected on behalf of third parties. The group recognises revenue when control of the goods or services is transferred to the customer. Revenue is recognised to the extent it is probable the group will receive the economic benefits and it can be measured reliably. Most contracts with customers provide for commercial discounts and discounts based on volumes, which modify the revenue itself. In defining the amount of the variable consideration that may be included in the transaction price, the group calculates the amount of variable consideration that cannot yet be considered realised at each reporting date.
Revenue from the sale of HVAC products and services refer to sales of products for air control and humidification in the industrial, residential and commercial segment (heat ventilation and air conditioning), while refrigeration revenue refers to sales to the food retail and food service segment. The sales in both markets can be divided into the following three macro channels: OEM (Original Equipment Manufacturers), Dealers and Projects. Noncore revenue is earned on products that do not make up the group's core business.
The warranties related to these categories of products are warranties for general repairs and in most cases, the group does not provide extended warranties. The group recognises warranties in compliance with IAS 37 Provisions, contingent liabilities and contingent assets.
There are no significant services provided for a lengthy period of time.
Advertising and research costs are expensed in full as required by IAS 38 Intangible assets. Revenue from services is recognised when the services are rendered.
Revenue and expenses are recognised on an accruals basis in line with the interest accrued on the carrying amount of the related financial assets and liabilities using the effective interest method.
They are recognised when the shareholder's right to receive payment is established, which normally takes place when the shareholders pass the related resolution. The dividend distribution is recognised as a liability in the financial statements of the period in which the shareholders approve such distribution.
They reflect a realistic estimate of the group's tax burden, calculated in accordance with the laws enacted in the countries where the Carel Industries Group operates; current tax liabilities are recognised in the statement of financial position net of any payments on account.
Deferred tax assets and liabilities arise on temporary differences between the carrying amount of an asset or liability pursuant to the IFRS and its tax base, calculated using the current tax rates or tax rates reasonably expected to be enacted in future years. Deferred tax assets are only recognised when their recovery is probable while deferred tax liabilities are always recognised, except in the situations in which recording a tax liability would not be appropriate under IAS 12 Income taxes (for example on initial recognition of goodwill or a situation in which the group does not anticipate the reversal of the liability in the foreseeable future). The group does not apply any netting of current and deferred taxes. A tax liability is accounted for in the year in which the liability to pay a dividend is recognised, if untaxed reserves are distributed.
Foreign currency financial assets and liabilities are translated into Euros using the transaction-date exchange rate. Any gains or losses when the foreign currency financial asset is collected or the financial liability settled are recognised in profit or loss.
Revenue, income, costs and expenses related to foreign currency transactions are recognised at the spot rate ruling on the transaction date. At the closing date, foreign currency assets and liabilities, excluding noncurrent assets (which continue to be recognised using the transaction-date exchange rate) are re-translated using the spot closing rate and the related exchange gains or losses are recognised in profit or loss.
The main exchange rates (against the Euro) used to translate the financial statements of foreign currency operations at 31 December 2022 and 2021 (comparative figures) are set out below:
| Valute | Average rate | |||
|---|---|---|---|---|
| 31.12.2021 | 31.12.2022 | 31.12.2021 | 31.12.2022 | |
| Pound sterling | 0.860 | 0.853 | 0.840 | 0.887 |
| Hong Kong dollar | 9.193 | 8.245 | 8.833 | 8.316 |
| Brazilian real | 6.378 | 5.440 | 6.310 | 5.639 |
| US dollar | 1.183 | 1.053 | 1.133 | 1.067 |
| Australian dollar | 1.575 | 1.517 | 1.562 | 1.569 |
| Valute | Average rate | |||
|---|---|---|---|---|
| 31.12.2021 | 31.12.2022 | 31.12.2021 | 31.12.2022 | |
| Chinese renminbi (yuan) | 7.628 | 7.079 | 7.195 | 7.358 |
| Indian rupee | 87.439 | 82.686 | 84.229 | 88.171 |
| South African rand | 17.477 | 17.209 | 18.063 | 18.099 |
| Russian ruble | 87.153 | 72.151 | 85.300 | 75.655 |
| South Korean won | 1,354.060 | 1,358.070 | 1,346.380 | 1,344.090 |
| Mexican peso | 23.985 | 21.187 | 23.144 | 20.856 |
| Swedish krona | 10.147 | 10.630 | 10.250 | 11.122 |
| Japanese yen | 129.877 | 138.027 | 130.380 | 140.660 |
| Polish zloty | 4.565 | 4.686 | 4.597 | 4.681 |
| Thai baht | 37.837 | 36.856 | 37.653 | 36.835 |
| Croatian kuna | 7.528 | 7.535 | 7.516 | 7.537 |
| UAE dirham | 4.344 | 3.867 | 4.160 | 3.917 |
| Singapore dollar | 1.589 | 1.451 | 1.528 | 1.430 |
| Norwegian krone | 10.163 | 10.103 | 9.989 | 10.514 |
| Swiss franc | 1.081 | 1.005 | 1.033 | 0.985 |
| Ukrainian hryvnia | 32.259 | 34.025 | 30.922 | 39.037 |
| Canadian dollar | 1.483 | 1.370 | 1.439 | 1.444 |
| Turkish lira | 11.304 | 17.409 | 15.234 | 19.965 |
They are recognised at historical cost, including ancillary costs necessary to ready the asset for the use for which it has been purchased.
Maintenance and repair costs that do not extend the asset's life and/or enhance its value are expensed when incurred; otherwise, they are capitalised.
Property, plant and equipment are stated net of accumulated depreciation and impairment losses calculated using the methods described later in this section. The depreciable amount of an asset is allocated on a systematic basis over its useful life, which is reviewed once a year. Any necessary changes are applied prospectively.
The depreciation rates of the main categories of property, plant and equipment are as follows:
| Industrial buildings | from 3% to 5% |
|---|---|
| Plant and machinery | from 10% to 15.5% |
| Industrial and commercial equipment | from 12% to 40% |
Land has an indefinite useful life and therefore is not depreciated.
Assets held under finance lease are recognised as right-of-use assets at the present value of the minimum lease payments. The liability to the lessor is shown under financial liabilities. The assets are depreciated over the lease term. Lease payments for short-term leases or leases of low-value assets are recognised in profit or loss over the lease term.
The liability to the lessor is shown under financial liabilities. The right-of-use assets are depreciated using the above rates.
When the asset is sold or there are no future economic benefits expected from its use, it is derecognised and the gain or loss (calculated as the difference between the asset's sales price and carrying amount) is recognised in profit or loss in the year of derecognition.
This is the excess of the aggregate of the consideration transferred for a business combination, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of the acquirer's previously held equity interest in the acquiree over the net of the acquisition-date fair value of the assets acquired and liabilities assumed. Goodwill is not amortised but is tested annually for impairment or whenever events take place that suggest it may be impaired.
These are identifiable, non-monetary assets without physical substance that are controlled by the group and from which future economic benefits are expected to flow to the entity. They are initially recognised at cost when this can be reliably determined using the same methods applied to property, plant and equipment.
These assets are subsequently presented net of accumulated amortisation and any impairment losses. Their useful life is reviewed regularly and any changes are applied prospectively. Costs incurred to internally generate an intangible asset are capitalised in line with the provisions of IAS 38.
Their estimated average useful life is between three and fifteen years.
Gains or losses on the sale of an intangible asset are calculated as the difference between the asset's sales price and its carrying amount. They are recognised in profit or loss at the sales date.
Assets with an indefinite useful life are not amortised but are tested for impairment at least once a year to check whether their carrying amount has undergone impairment. The board of directors adopted a policy that defines the criteria for the impairment test, the controls to be carried out to guarantee the reliability of the process and the procedure to approve the test, in line with Consob (the Italian Commission for listed companies and the stock exchange) recommendation no. 0003907 of 15 January 2015.
Amortisable assets are tested for impairment whenever events or circumstances suggest that their carrying amount cannot be recovered (trigger events). In both cases, the impairment loss is the amount by which the asset's carrying amount exceeds its recoverable amount, which is the higher of the asset's fair value less costs to sell and its value in use. If it is not possible to determine an asset's value in use, the recoverable value of the cash-generating unit (CGU) to which the asset belongs is calculated. Assets are grouped into the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The group calculates the present value of the estimated future cash flows of the CGU using a discount rate that reflects the time value of money and the risks specific to the asset.
If an impairment loss on an asset other than goodwill subsequently decreases or no longer exists, the carrying amount of the asset or the CGU is increased to the new estimate of its recoverable amount which will not, in any case, exceed the carrying amount the asset would have had if no impairment loss had been recognised.
Reversals of impairment losses are recognised immediately in profit or loss using the model provided for in IAS 16 Property, plant and equipment.
Investments in associates and joint ventures are measured using the equity method, while other investments are measured at fair value through other comprehensive income. If fair value cannot be reliably determined, the investments are measured at cost adjusted for impairment losses, which are recognised in profit or loss.
If the reasons for the impairment loss no longer exist, the equity investments recognised at cost are revalued with reversal of the impairment loss through profit or loss.
They are initially recognised at their fair value and subsequently measured at amortised cost. Financial assets are initially recognised at their fair value increased, in the case of assets other than those recognised at fair value through profit or loss, by ancillary costs. When subscribed, the group assesses whether a contract includes embedded derivatives. The embedded derivatives are separated from the host contract if this is not measured at fair value when the analysis shows that the economic characteristics and risks of the embedded derivative are not closely related to those of the host contract.
The group classifies its financial assets after initial recognition and, when appropriate and permitted, reviews this classification at the reporting date.
It recognises all purchases and sales of financial assets at the transaction date, i.e., the date on which the group assumes the commitment to buy the asset.
All financial assets within the scope of IFRS 9 are recognised at amortised cost or fair value depending on the business model for managing the financial asset and the asset's contractual cash flow characteristics.
Specifically:
When a debt instrument measured at FVTOCI is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. On the other hand, when an equity instrument measured at FVTOCI is derecognised, the cumulative gain or loss that was previously recognised in other comprehensive income is transferred to retained earnings, without affecting profit or loss.
Debt instruments subsequently measured at amortised cost or FVTOCI are tested for impairment.
Any impairment losses are recognised in profit or loss after use of the fair value reserve if this has been set up. Subsequent reversals of impairment losses are recognised in profit or loss except in the case of equity instruments for which the reversal is recognised in equity.
They are measured at the lower of purchase and/or production cost, calculated using the weighted average cost method, and net realisable value. Purchase cost comprises all ancillary costs. Production cost includes the directly related costs and a portion of the indirect costs that are reasonably attributable to the products.
Work in progress is measured at average cost considering the stage of completion of the related contracts.
Obsolete and/or slow moving items are written down to reflect their estimated possible use or realisation through an allowance.
The write-down is reversed in subsequent years if the reasons therefor no longer exist.
They are initially recognised at fair value, which is the same as their nominal amount, and subsequently measured at amortised cost and impaired, if appropriate. Their carrying amount is adjusted to their estimated realisable amount through the loss allowance.
Foreign currency trade receivables are translated into Euros using the transaction-date exchange rate and subsequently retranslated using the closing rate. The exchange gain or loss is recognised in profit or loss.
They include cash, i.e., highly liquid investments (maturity of less than three months) that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
This caption includes the Italian post-employment benefits ("TFR") and other employee benefits covered by IAS 19 Employee benefits. As a defined benefit plan, independent actuaries calculate the TFR at the end of each reporting period. The liability recognised in the statement of financial position is the present value of the defined benefit obligation at the end of the reporting period. These benefits are calculated using the projected unit credit method.
As required by IAS 37 Provisions, contingent liabilities and contingent assets, the group recognises a provision when it has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Changes in estimates from one period to another are recognised in profit or loss.
Where the effect of the time value of money is material and the payment dates of the obligation can be estimated reliably, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation. Any subsequent changes arising from the passage of time are recognised as financial income or expense in the statement of profit or loss.
No provision is made for possible but not probable risks but the group provides adequate disclosure thereon in the notes.
Trade payables and other current liabilities which fall due within normal trading terms are initially recognised at cost, which equals their nominal amount, and are not discounted. When their due date is longer than normal trading terms, the interest is separated using an appropriate market rate.
They are classified as current liabilities unless the group has an unconditional right to defer their payment for at least 12 months after the reporting date. The group removes the financial liability when it is extinguished and the group has transferred all the risks and rewards related thereto. Financial liabilities are initially recognised at their fair value and subsequently measured using the amortised cost method.
The group solely uses derivatives to hedge currency risk on foreign currency commercial transactions and interest risk on its medium to long-term debt.
Initial recognition and subsequent measurement is at the derivatives' fair value, applying the following accounting treatments:
Fair value hedge - if a derivative is designated as a hedge of the group's exposure to changes in fair value of a recognised asset or liability that could affect profit or loss, the gain or loss from remeasuring the hedging instrument at fair value is recognised in profit or loss as is the gain or loss on the hedged item.
Cash flow hedge - if a derivative is designated as a hedge of the exposure to variability in cash flows of a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income; the cumulative gain or loss is reclassified to profit or loss in the same period during which the hedged forecast cash flows affect profit or loss; the gain or loss on the hedge or the ineffective portion of the gain or loss on the hedging instrument is recognised in profit or loss.
When the conditions for application of hedge accounting are no longer met, the group reclassifies the fair value gains or losses on the derivative directly to profit or loss.
Preparation of the consolidated financial statements requires management to apply accounting policies and methods that, in certain circumstances, are based on difficult and subjective judgements, past experience or assumptions that are considered reliable and realistic at that time depending on the related circumstances. Application of these estimates and assumptions affects the amounts recognised in the statement of financial position, the statement of profit or loss and the statement of cash flows as well as the disclosures. Actual results may differ from those presented in the consolidated financial statements due to the uncertainty underlying the assumptions and the conditions on which the estimates were based.
The captions that require the greater use of estimates and for which a change in the conditions underlying the assumptions may affect the consolidated financial statements are:
• loss allowance: this allowance comprises management's best estimates about expected credit losses on receivables from end customers. Management estimates the allowance on the basis of the expected credit losses, considering past experience for similar receivables, the performance of past due receivables, assessments of the credit quality and forecasts of economic and market conditions. Management's estimates, which are based on past experience and the market, may be affected by changes in the
competitive scenario or the market in which the group operates;
At least once a year, the group tests goodwill for impairment. It calculates the recoverable amount of the CGU as the value in use using the discounted cash flow method applying assumptions, such as estimates of future increases in sales, operating costs, the growth rate of the terminal value, investments, changes in working capital and the weighted average cost of capital (discount rate).
The value in use may change if the main estimates and assumptions made in the plan change and, hence, the impairment test. Therefore, the realisable value of the recognised assets may also change.
IFRS 13 is the only reference source for fair value measurement and the related disclosures when this measurement is required or permitted by another standard. IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard replaces and extends the disclosure required about fair value measurement in other standards, including IFRS 7 Financial instruments: disclosures.
IFRS 13 establishes a fair value hierarchy that categorises into three levels the inputs to valuation techniques used to measure fair value in hierarchical order as follows:
The method used to estimate fair value is as follows:
Reference should be made to the specific comments provided in the notes to the assets or liabilities for more
information about the assumptions used to determine fair value.
The fair value of financial instruments not quoted on an active market is calculated in accordance with valuation techniques generally adopted by the financial sector and specifically:
The objective of IFRS 7 is to require entities to provide disclosures in their financial statements that enable users to evaluate:
The principles in this standard complement the principles for recognising, measuring and presenting financial assets and financial liabilities in IAS 32 Financial instruments: presentation and IFRS 9.
This section presents the supplementary disclosures required by IFRS 7.
The accounting policies applied to measure financial instruments are described in the section on the Accounting policies.
The group's operations expose it to a number of financial risks that can affect its financial position, financial performance and cash flows due to the impact of its financial instruments.
These risks include:
The parent's board of directors has overall responsibility for the design and monitoring of a financial risk management system. It is assisted by the various units involved in the operations generating the different types of risk.
The units establish tools and techniques to protect the group against the above risks and/or transfer them to third parties (through insurance policies) and they assess the risks that are neither hedged nor insured pursuant to the guidelines established by the board of directors for each specific risk.
The degree of the group's exposure to the different financial risk categories is set out below.
The group operates on various national markets with a high number of medium and large-sized customers, mostly regional or local distributors. Therefore, it is exposed to credit risk in conjunction with its customers' ability to obtain credit from banks.
The group's credit risk management policy includes rating its customers, setting purchase limits and preparing periodic reports, to ensure tight control over credit collection. Each group company has a credit manager in charge of credit collection on sales made in their markets. Coordination between the companies that operate in the same market (for example, the Italian companies) is based on the electronic exchange of information about common customers and the coordination of delivery blocks or the commencement of legal action.
The loss allowance is equal to the nominal amount of the uncollectible receivables after deducting the part secured with bank collateral. The group analyses all the collateral given to check collectability. Impairment losses are recognised considering past due receivables from customers with financial difficulties and receivables for which legal action has commenced. Furthermore, the group did not modify payment terms applied to customers or its credit risk management policies, while it prudently reinforced monitoring of credit positions with customers.
| 31.12.2022 | 31.12.2021 | ||||
|---|---|---|---|---|---|
| (thousands of Euros) | Trade receivables | Loss allowance | Trade receivables | Loss allowance | |
| Not yet due | 85,875 | (1,306) | 67,699 | (724) | |
| Past due < 6 months | 8,663 | (153) | 7,430 | (159) | |
| Past due > 6 months | 639 | (179) | 134 | (134) | |
| Past due > 12 months | 357 | (204) | 456 | (247) | |
| Total | 95,534 | (1,841) | 75,719 | (1,265) |
The following table shows a breakdown of trade receivables by past due bracket:
The group has a high level of liquidity and limited net financial debt. During the year, it had easy access to additional funding, without additional costs.
The group mainly deals with well-known and reputable customers. Its policy is to constantly monitor those customers that request payment extensions. As required by IFRS 7, the next table shows the cash flows of the group's financial liabilities by maturity:
| 31.12.2022 | |||||
|---|---|---|---|---|---|
| (thousands of Euros) | TOTAL | Total cash flows |
Within one year |
From one to five years |
After five years |
| Bank loans and borrowings at amortised cost | 51,784 | 54,322 | - | 23,039 | 31,284 |
| Amounts due to bondholders | 39,468 | 45,213 | - | 3,208 | 42,005 |
| Lease liabilities | 27,216 | 29,675 | - | 16,017 | 13,658 |
| Effective hedging derivatives | - | - | - | - | |
| Other loans and borrowings at amortised cost | 489 | 495 | - | 198 | 297 |
| Other financial liabilities | 2,436 | 2,436 | - | 2,436 | - |
| Non-current financial liabilities | 121,392 | 132,141 | - | 44,898 | 87,243 |
| CERTIFIED |
|---|
| 31.12.2022 | |||||
|---|---|---|---|---|---|
| (thousands of Euros) | TOTAL | Total cash flows |
Within one year |
From one to five years |
After five years |
| Bank loans at amortised cost | 69,716 | 72,611 | 72,611 | - | - |
| Amounts due to bondholders | 114 | 802 | 802 | - | - |
| Lease liabilities | 5,434 | 6,157 | 6,157 | - | - |
| Bank borrowings at amortised cost | 901 | 901 | 901 | - | - |
| Other loans and borrowings at amortised cost | 194 | 198 | 198 | - | - |
| Derivatives held for trading at fair value through profit or loss |
236 | 311 | 311 | - | - |
| Other financial liabilities | 7,365 | 7,365 | 7,365 | - | - |
| Current financial liabilities | 83,960 | 88,345 | 88,345 | - | - |
As the group sells its products in various countries around the world, it is exposed to the risk deriving from changes in foreign exchange rates. This risk mainly arises on sales in currencies like the US dollar, the Chinese renminbi and the Polish zloty.
In addition, the parent has investments in subsidiaries denominated in foreign currency. Changes in equity due to fluctuations in exchange rates are recognised in the translation reserve. The group does not currently hedge against the risk arising on the translation of equity. The following table shows the group's exposure arising from foreign currency assets and liabilities, highlighting the most significant for each year:
| 31.12.2022 | ||||||
|---|---|---|---|---|---|---|
| (thousands of Euros) | EUR | USD | PLN | CNY | Other currencies |
Total |
| Total assets | 463,034 | 78,844 | 20,339 | 43,534 | 34,714 | 640,464 |
| Total liabilities | 356,863 | 49,774 | 5,189 | 7,429 | (37) | 419,218 |
The next table shows a sensitivity analysis of the risk arising on the translation of foreign currency financial statements of the consolidated companies assuming a 10% increase or decrease in the average annual exchange rate. The effect is calculated considering the impact of this increase or decrease on the key performance indicators used by management:
| NET REVENUE | |||||
|---|---|---|---|---|---|
| (thousands of Euros) | 31.12.2022 | ||||
| Average annual rate | Rate +10% | Rate -10% | |||
| USD | 75,638 | 68,762 | 84,042 | ||
| GBP | 8,498 | 7,725 | 9,442 | ||
| CNY | 47,424 | 43,113 | 52,693 | ||
| AUD | 7,802 | 7,093 | 8,669 | ||
| ZAR | 7,007 | 6,370 | 7,786 |
| 31.12.2022 | |||||
|---|---|---|---|---|---|
| (thousands of Euros) | Average annual rate | Rate +10% | Rate -10% | ||
| BRL | 9,087 | 8,261 | 10,097 | ||
| PLN | 37,812 | 34,375 | 42,013 | ||
| Other currencies | 10,060 | n.a | n.a | ||
| EUR | 341,524 | 341,524 | 341,524 |
| PROFIT BEFORE TAX | ||||||
|---|---|---|---|---|---|---|
| 31.12.2022 | ||||||
| (in migliaia di euro) | Average annual rate | Rate +10% | Rate -10% | |||
| USD | 13,497 | 12,270 | 14,997 | |||
| GBP | 6,064 | 5,513 | 6,738 | |||
| CNY | (5,628) | (5,116) | (6,253) | |||
| AUD | 5,167 | 4,697 | 5,741 | |||
| ZAR | 5,902 | 5,365 | 6,558 | |||
| BRL | 6,568 | 5,971 | 7,298 | |||
| PLN | 5,725 | 5,205 | 6,361 | |||
| Other currencies | (20,137) | n.a | n.a | |||
| EUR | 66,244 | 66,244 | 66,244 |
The group agrees currency hedges to set the exchange rate in line with forecast sales and purchases volumes to protect itself against currency fluctuations with respect to its foreign currency transactions. The hedges are based on the group's net exposure using currency forwards, to hedge the transaction risk, and/or plain vanilla options to hedge the economic risk in line with its financial policy. The hedged risk is part of the global risk and the hedges are not speculative.
Moreover, as the parent prepares its consolidated financial statements in Euros, fluctuations in the exchange rates used to translate the financial statements of the foreign subsidiaries into the presentation currency could affect the group's financial position, financial performance and cash flows.
Exchange rates were more volatile in 2022 continuing the trend of the previous year. As a result, there was an increase in financial statements captions linked to the translation of amounts into Euro. Management constantly monitors exchange rates and the exposure of current assets and liabilities in foreign currencies so that it can put suitable hedges in place to mitigate the risk.
This is the risk that the fair value and/or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The group is exposed to interest rate risk due to its need to finance its operating activities, both production and financial (the purchase of assets), and to invest its available liquidity. Changes in market interest rates may negatively or positively affect the group's results and, hence, indirectly the cost of and return on financing and investing activities.
The group regularly checks its exposure to interest rate fluctuations and manages such risks through the use of derivatives, in accordance with its financial policies. With regard to such policies, the use of derivatives is reserved exclusively for the management of interest rate fluctuations connected to cash flows and they are not agreed or held for trading purposes.
It solely uses interest rate swaps (IRS), caps and collars to do so.
The group's debt mainly bears floating interest rates. When deemed significant, the group agrees hedging instruments to neutralise fluctuations in interest rates and agrees a set future expense to cover up to 100% of its future cash outflows. Given its ample liquidity, it has an immaterial liquidity risk with respect to its shortterm deadlines and, therefore, this risk principally refers to its medium to long-term financing.
The derivatives used to hedge interest rate risk are generally cash flow hedges in order to set the interest to be paid on financing and obtain an optimum blend of floating and fixed interest rates applied to its financing.
The counterparties are major banks. Derivatives are measured at fair value.
The group is subjected to increasing competitive pressure due to the entry of new players into the OEM market (large international groups) and the development of new organised markets which constantly push prices down, especially in the electronics sector.
Demand for the group's products is also affected by fluctuations affecting the distribution channels of products and applications which, as noted, are mostly the OEM operating indirectly in the construction sector and operators linked to the food distribution sector (for the refrigeration business).
The group protects itself from the business risks deriving from its normal involvement in markets with these characteristics by focusing on technological innovation and geographical diversification and expansion leading to the group gaining international status as it is active on all the continents either directly or through exclusive third party franchisees.
The production sites in Italy, China, Brazil, the United States, Croatia, Germany and Poland aim to optimise production. They will also act as potential disaster recovery centres to deal with catastrophes that shut down production at the main site in Italy, where the parent has its registered office. The group's strategy is also to base its production near its markets and customers to provide faster time-to-market services and increase its production output to serve the rapidly growing markets.
The continuing production structure reorganisation, the related cost savings, geographical diversification and, last but not least, the group's constant commitment to searching for innovative technological solutions make it easier to be competitive.
In 2022, the group continued to focus on achieving the objectives set in its sustainability plan and brought forward some activities planned for the subsequent year.
The group revisited its carbon footprint analysis and reporting procedure and reported scope 3 emissions (extended to include various categories) for the first time as well as the scope 1 and 2 emissions already calculated for the past four years for all the in-scope companies (less the companies that entered the group in 2022). It reported all indirect emissions of its outbound logistics activities and waste from the production
sites, inbound logistics activities, purchased services, packaging, business trips and home-work commutes of parent personnel.
The group also completed an expeditious lifecycle assessment (LCA) of one of its key products that contributes to the ongoing extension of the analysis of scope 3 emissions (indirect emissions not directly controllable by the group). This assessment will give a more accurate and extensive snapshot of both consumption and emissions related to production and, more generally, the group's economic activities so that the group can best define future actions to mitigate its carbon footprint.
The parent's two new buildings housing the new knowledge centre, offices and canteen are classified as A4 and A3 energy efficiency, i.e., ultra-low-energy buildings. They are supplied solely with electrical energy (from renewable sources) as well as generating energy from the solar panels, confirming the group's commitment to reducing its emissions and consumption.
2022 was the second year the group reported its KPIs (turnover, CapEx and OpEx) in accordance with the Green Taxonomy Regulation. It continues to implement its climate mitigation strategy, as better defined in the Delegated Acts issued by the European Commission. Its findings confirm those of 2021. More information is available in the consolidated non-financial statement.
The Group launched a process to analyse risks associated with climate change, which will also enable their monitoring and possible updating as changes, including climatic changes, in terms of timing and magnitude, occur.
In addition to the financial risks identified in the previous sections, the group has preliminarily identified a number of potential risks related to climate change; these include the physical risks associated with an increase in extreme weather events and the transition risks associated with the transition to a low-carbon economy.
These risks, which are reflected, for example, in an increase in energy and transport costs, were also taken into account when drawing up the forward-looking plans that the group prepares to assess its future profitability and investment policy. Indeed, partly in addition to that originally estimated, the group approved the investments for the installation of solar panels on the new leased buildings at the parent's headquarters, those of the German HygroMatik, CFM, Carel and Carel Suzhou.
With regard to physical risks, the group continued to implement its production mirroring strategy launched in connection with the outbreak of the Covid-19 pandemic in order to mitigate potential adverse events.
Lastly, the group aims to capitalise on the opportunities offered by climate change and continued to promote the transition towards sustainable development in its sector, by constantly investing in research and development, as discussed in the specific section of the directors' report, to ensure that its products perform to the highest standards in terms of energy efficiency.
At 31 December 2022, property, plant and equipment amount to €109,687 thousand compared to €84,403 thousand at 31 December 2021. The following table provides a breakdown of the caption and the changes of the year.
| YEAR CHANGES | ||||||||
|---|---|---|---|---|---|---|---|---|
| (thousands of Euros) | Land and buildings |
Plant and machinery |
Industrial and commercial equipment |
Other items of property, plant and equipment |
Assets under construction and payments on account |
Total | ||
| Balance at 31 December 2021 | 45,561 | 18,191 | 10,530 | 5,377 | 4,743 | 84,403 | ||
| - Historical cost | 57,642 | 41,356 | 47,606 | 19,331 | 4,743 | 170,679 | ||
| - Accumulated depreciation | (12,081) | (23,164) | (37,077) | (13,953) | - | (86,276) | ||
| Changes in 2022 | ||||||||
| - Investments | 1,716 | 6,287 | 4,139 | 3,691 | 6,464 | 22,297 | ||
| - Investments in right-of-use assets | 5,691 | - | 34 | 1,045 | - | 6,769 | ||
| - Business combinations (historical cost) |
5,336 | 3,615 | 2,299 | 696 | 177 | 12,123 | ||
| - Business combinations (right-of-use assets) |
3,583 | - | 19 | 210 | - | 3,812 | ||
| - Reclassifications (historical cost) | 6,968 | 1,007 | 220 | 198 | (8,165) | 228 | ||
| - Impairment losses | (36) | - | - | - | (36) | |||
| - Sales (historical cost) | (40) | (135) | (115) | (550) | 3 | (838) | ||
| - Sales - Right-of-use assets (historical cost) |
(1,065) | - | (79) | (367) | - | (1,512) | ||
| - Exchange differences on historical cost |
92 | 183 | (247) | (4) | (13) | 11 | ||
| - Exchange differences on accumulated depreciation |
3 | (45) | 146 | (13) | - | 92 | ||
| - Exchange differences on right-of use assets |
(119) | - | - | 17 | - | (101) | ||
| - Depreciation | (973) | (3,565) | (3,966) | (1,512) | - | (10,016) | ||
| - Depreciation of right-of-use assets | (3,700) | - | (136) | (884) | - | (4,721) | ||
| - Business combinations (accumulated depreciation) |
(657) | (2,262) | (1,488) | (258) | - | (4,665) | ||
| - Reclassifications (accumulated depreciation) |
42 | 43 | 155 | (172) | - | 68 | ||
| - Restatement of right-of-use assets | (312) | - | - | (72) | - | (385) | ||
| - Sales (accumulated depreciation) | - | 104 | 135 | 478 | - | 717 | ||
| - Sales - Right-of-use assets (accumulated depreciation) |
977 | - | 93 | 371 | - | 1,441 | ||
| Total changes | 17,504 | 5,234 | 1,207 | 2,874 | (1,534) | 25,284 | ||
| Balance at 31 December 2022 | 63,065 | 23,425 | 11,737 | 8,251 | 3,209 | 109,687 | ||
| including: | ||||||||
| - Historical cost | 79,454 | 52,314 | 53,875 | 24,194 | 3,209 | 213,047 | ||
| - Accumulated depreciation | (16,389) | (28,889) | (42,139) | (15,944) | - | (103,360) |
Land and buildings increased as a result of investments in right-of-use assets after new leases were signed by the parent for two new buildings and a plot of land acquired by the Croatian group company to build a second production site.
Plant and machinery and Industrial and commercial equipment include investments, roughly half of which were made to facilitate a significant upturn in capacity in Croatia to support the European market. Specifically, the new production site was finished and the group company purchased equipment for electronic production, such as a new assembly and welding line for the parametric controllers.
The Italian group companies invested in equipment and software to upgrade production processes in terms of their quality, efficiency and response times to customers' requests for personalisation.
In China, the valve production line for the domestic market was extended and a similar investment was made in the US.
Recuperator completed its investment for the plastic exchangers production line.
The group also invested in the duplication of plastic moulding equipment to create production redundancy.
Assets under construction and payments on account mostly consist of capitalised costs to complete the parent's knowledge centre and second building.
A breakdown of property, plant and equipment by geographical segment is as follows:
| PROPERTY, PLANT AND EQUIPMENT | ||||
|---|---|---|---|---|
| (thousands of Euros) | 2022 | 2021 | ||
| Europe, Middle East and Africa | 78,245 | 56,823 | ||
| APAC | 18,947 | 18,388 | ||
| North America | 11,589 | 8,455 | ||
| South America | 905 | 737 | ||
| Total | 109,687 | 84,403 |
The group's property, plant and equipment were not mortgaged or pledged in either year. They are suitably hedged for risks deriving from losses and/or damage thereto through insurance policies taken out with leading insurers.
The group did not capitalise borrowing costs, in line with previous years.
At 31 December 2022, this caption amounts to €181,645 thousand compared to €134,570 thousand at the end of 2021. The following table presents changes in these assets:
| YEAR CHANGES | ||||||
|---|---|---|---|---|---|---|
| (thousands of Euros) | Development expenditure |
Trademarks, industrial patents and software licences |
Goodwill | Other assets | Assets under development and payments on account |
Total |
| Balance at 31 December 2021 | 6,269 | 9,651 | 67,347 | 48,807 | 2,496 | 134,570 |
| - Historical cost | 27,073 | 28,258 | 67,347 | 56,472 | 2,496 | 181,646 |
| - Accumulated amortisation | (20,804) | (18,607) | (7,665) | - | (47,076) | |
| Changes in 2022 | ||||||
| - Investments | 31 | 3,591 | - | 28 | 851 | 4,501 |
| - Business combinations (historical cost) |
- | 5,741 | 21,783 | 25,619 | - | 53,143 |
| CERTIFIED |
|---|
| (thousands of Euros) | Development expenditure |
Trademarks, industrial patents and |
Goodwill | Other assets | Assets under development and payments on |
Total |
|---|---|---|---|---|---|---|
| software licences | account | |||||
| - Reclassifications (historical cost) | 1,369 | 1,119 | - | 3 | (2,447) | 45 |
| - Impairment losses | - | - | - | - | - | - |
| - Restatements | - | (6) | (469) | - | - | (475) |
| - Exchange differences on historical cost |
12 | (7) | (50) | 31 | (17) | (32) |
| - Exchange differences on accumulated amortisation |
4 | (1) | (20) | - | (18) | |
| - Amortisation | (2,143) | (3,045) | - | (4,455) | - | (9,642) |
| - Business combinations (accumulated amortisation) |
- | (38) | - | (74) | - | (112) |
| - Reclassifications (accumulated amortisation) |
(34) | (296) | - | (10) | - | (340) |
| - Sales (accumulated amortisation) |
- | 6 | - | - | - | 6 |
| Total changes | (761) | 7,064 | 21,263 | 21,122 | (1,613) | 47,075 |
| Balance at 31 December 2022 | 5,508 | 16,715 | 88,610 | 69,929 | 883 | 181,645 |
| including: | ||||||
| - Historical cost | 28,485 | 38,696 | 88,610 | 82,153 | 883 | 238,877 |
| - Accumulated amortisation | (22,977) | (21,981) | - | (12,224) | - | (57,232) |
La suddivisione delle attività immateriali per area geografica è la seguente:
| INTANGIBLE ASSETS | ||||
|---|---|---|---|---|
| (thousands of Euros) | 2022 | 2021 | ||
| Europe, Middle East and Africa | 132,875 | 130,622 | ||
| APAC | 2,617 | 2,389 | ||
| North America | 46,148 | 1,556 | ||
| South America | 5 | 3 | ||
| Total | 181,645 | 134,570 |
With reference to intangible assets:
amount of any non-controlling interest in the acquiree and the acquisition-date fair value of the acquirer's previously held equity interest in the acquiree over the net of the acquisition-date fair value of the assets acquired and liabilities assumed.
At 31 December 2022, goodwill amounts to €88,610 thousand, compared to €67,347 thousand at 31 December 2021. The increase is due to allocation of the consideration paid for the newly-acquired companies, Senva, Sauber and Arion, as described below
| GOODWILL | |||||||
|---|---|---|---|---|---|---|---|
| (thousands of Euros) | 31.12.2022 | Increase | Other Movement |
Exchange differences |
31.12.2021 | ||
| HygroMatik GmbH | 38,499 | - | - | - | 38,499 | ||
| Recuperator S.p.A. | 6,326 | - | - | - | 6,326 | ||
| Carel Thailand CO Ltd | 2,184 | - | - | (50) | 2,234 | ||
| CFM Sogutma ve Otomasyon | 11,431 | - | - | - | 11,431 | ||
| Enginia S.r.l. | 6,644 | - | - | - | 6,644 | ||
| Arion S.r.l. | 1,980 | 1,980 | - | - | - | ||
| Sauber S.r.l. | 1,264 | 1,264 | - | ||||
| Senva Inc | 18,538 | 18,538 | - | ||||
| Other goodwill | 1,743 | - | (469) | - | 2,212 | ||
| Total | 88,610 | 21,782 | (469) | (50) | 67,347 |
Other goodwill includes amounts that are individually and collectively immaterial.
As required by IAS 36, the group tests goodwill recognised in its consolidated financial statements for impairment at least once a year, including if there are no indicators of impairment.
Goodwill is recognised on the acquisitions shown in the previous table considered as the CGUs for impairment testing purposes. Therefore, the group only tested those CGUs to which goodwill had been allocated. The principal test methods and results for the main CGUs, Recuperator, Hygromatik, CFM, Enginia, Sauber and Senva, are shown below.
The recoverable amount of goodwill of each CGU is determined by calculating its value in use.
The methods and assumptions underlying the impairment tests of the CGUs included:
| CGU | |||
|---|---|---|---|
| Plan horizon | Growth rate g | WACC | |
| Recuperator | 2023-2026 | 2.30% | 10.50% |
| HygroMatik | 2023-2026 | 2.00% | 8.60% |
| Enginia | 2023-2025 | 2.30% | 10.50% |
| CFM | 2023-2026 | 3.00% | 15.00% |
| Sauber | 2023-2025 | 1.70% | 8.60% |
| Senva * | 2023-2027 | 2.00% | 11.50% |
*plan included in the acquisition contract
The values in use, calculated using the discounted cash flows, confirm the carrying amount of goodwill. Specifically, the tests showed the following coverage:
| CGU | |||
|---|---|---|---|
| (in migliaia di euro) | Coverage | ||
| Recuperator | 6,380 | ||
| HygroMatik | 17,045 | ||
| Enginia | 4,425 | ||
| CFM | 11,655 | ||
| Sauber | 4,590 | ||
| Senva | 5,262 |
Although the directors believe that the assumptions used are reasonable and represent the most probable scenarios based on the available information, the result of the test could differ should the above assumptions significantly change.
Accordingly, stress tests were carried out, related, in particular, to:
The following CGUs pass the stress test even if the gross operating profit decreases or the WACC increases as set out below:
| CGU | ||
|---|---|---|
| Gross operating profit +/- | WACC +/- | |
| Recuperator | -60% | (1.10%) |
| HygroMatik | > -75% | (1.10%) |
| Enginia | -75% | (1.00%) |
| CFM | -55% | (1.50%) |
| Sauber | > -75% | (3.30%) |
Therefore, there was no need to impair goodwill at 31 December 2022.
At 31 December 2022, this caption amounts to €1,446 thousand compared to €1,250 thousand at 31 December 2021. It may be analysed as follows:
| COMPANY | Investment % 31.12.2022 | Change in | Exchange | Equity | 31.12.2021 | |
|---|---|---|---|---|---|---|
| (thousands of Euros) | consolidation scope |
differences | accounting | |||
| Arion S.r.l. | 70% | - | (2,126) | - | 2,097 | 29 |
| Free Polska s.p.z.o.o. | 30% | 1,359 | - | (63) | 263 | 1,159 |
| Others | 87 | 24 | - | - | 63 | |
| Total | 1,446 | (2,102) | (63) | 2,360 | 1,250 |
At 31 December 2022, other non-current assets amount to €9,769 thousand compared to €10,407 thousand at 31 December 2021; they are broken down as follows:
| (thousands of Euros) | 31.12.2022 | 31.12.2021 |
|---|---|---|
| Guarantee deposits | 635 | 432 |
| Third parties | 263 | 176 |
| Other assets | 8,871 | 9,799 |
| Total | 9,769 | 10,407 |
Other assets include the substitute tax paid by the parent on the higher values allocated and recognised in the consolidated financial statements at 31 December 2018, implicit in the carrying amount of the equity investment, pursuant to article 15.10-bis of Law decree no. 185/2008.
In 2022, the parent deducted the above amounts for both IRES (corporate income taxes) and IRAP (local tax on production) purposes and it released €1,962 thousand to profit or loss. The amount related to 2023 was reclassified to current assets.
The caption increased by €2,085 thousand following Recuperator's payment of the substitute tax on the higher value implicit in the carrying amount of the investment in Enginia pursuant to article 15.10-bis of Law decree no. 185/2008.
At 31 December 2022, deferred tax assets amount to €7,745 thousand compared to €7,022 thousand at 31 December 2021. The group has recognised deferred tax assets and liabilities on temporary differences between the carrying amount of assets and liabilities and their tax base.
It calculates taxes using the rates enacted in the countries where it operates when the temporary differences reverse. A breakdown of deferred tax assets is as follows:
| (thousands of Euros) | 2022 tax base | Deferred tax assets at 31 December 2022 |
2021 tax base | Deferred tax assets at 31 December 2021 |
|---|---|---|---|---|
| Allowance for inventory write-down | 10,198 | 2,366 | 7,346 | 1,632 |
| Non-deductible accruals | 2,861 | 782 | 3,418 | 879 |
| Amortisation of goodwill | 480 | 103 | 557 | 114 |
| (thousands of Euros) | 2022 tax base | Deferred tax assets at 31 December 2022 |
2021 tax base | Deferred tax assets at 31 December 2021 |
|---|---|---|---|---|
| Consolidation adjustments to intragroup inventory transactions |
16,590 | 3,395 | 11,949 | 2,825 |
| Carryforward tax losses | 863 | 172 | 975 | 190 |
| Other | 3,696 | 927 | 5,077 | 1,383 |
| Total | 34,688 | 7,746 | 29,322 | 7,022 |
Changes in deferred tax assets and liabilities are presented in the next table:
| 31.12.2022 | Recognised in profit or loss |
Change in consolidation scope |
Recognised in other comprehensive |
Exchange differences |
31.12.2021 | |
|---|---|---|---|---|---|---|
| (thousands of Euros) | income | |||||
| Deferred tax assets | 7,745 | 768 | 105 | (152) | 2 | 7,022 |
| Deferred tax liabilities | (18,242) | 1,059 | (1,575) | (535) | (81) | (17,110) |
| Total | (10,497) | 1,828 | (1,469) | (688) | (79) | (10,089) |
Deferred tax assets on carryforward tax losses amount to €172 thousand. The group believes that these losses can be recovered over time based on the cash flows that the group will generate in future years. The Japanese, South American and Indian subsidiaries did not recognise deferred tax assets on carryforward tax losses, which total €829 thousand.
At 31 December 2022, this caption amounts to €93,692 thousand compared to €74,455 thousand at 31 December 2021. It may be analysed as follows:
| (thousands of Euros) | 31.12.2022 | 31.12.2021 |
|---|---|---|
| Gross trade receivables | 95,534 | 75,719 |
| Loss allowance | (1,841) | (1,265) |
| Trade receivables | 93,692 | 74,455 |
The next table breaks down gross trade receivables by geographical segment:
| (thousands of Euros) | 31.12.2022 | 31.12.2021 |
|---|---|---|
| Europe, Middle East and Africa | 69,250 | 56,684 |
| APAC | 11,856 | 11,185 |
| North America | 11,724 | 6,238 |
| South America | 2,704 | 1,611 |
| Total | 95,534 | 75,719 |
The group does not usually charge default interest on past due receivables. Reference should be made to the section on risks and financial instruments for details of the receivables that are not yet due and/or are past due.
The group's receivables are not particularly concentrated. It does not have customers that individually account for more than 5% of the total receivables at each maturity date.
The loss allowance comprises management's estimates about credit losses on receivables from end customers and the sales network. Any impairment losses are recognised in Other expense (net) each year. Changes in the allowance are shown in the following table:
| 31.12.2022 | Impairment | Utilisations | Exchange | Change in | 31.12.2021 | |
|---|---|---|---|---|---|---|
| (thousands of Euros) | losses | differences | consolidation scope | |||
| Loss allowance | (1,841) | (564) | 317 | (69) | (261) | (1,265) |
At 31 December 2022, this caption amounts to €106,745 thousand compared to €80,907 thousand at 31 December 2021. It may be analysed as follows:
| (thousands of Euros) | 31.12.2022 | 31.12.2021 |
|---|---|---|
| Raw materials | 65,498 | 45,154 |
| Allowance for inventory write-down | (4,406) | (2,828) |
| Semi-finished products and work in progress | 6,130 | 4,455 |
| Finished goods | 45,503 | 38,515 |
| Allowance for inventory write-down | (6,366) | (4,716) |
| Payments on account | 388 | 328 |
| Total | 106,745 | 80,907 |
Inventories, gross of the allowance for inventory write-down, increased by a total of €29,067 thousand, partly due to the consolidation of the acquirees which contributed €9,179 thousand. The group recognised an allowance for inventory write-down (€10,773 thousand) to cover the difference between the cost and estimated realisable value of obsolete raw materials and finished goods. The accrual was recognised in the caption Costs of raw materials, consumables and goods and changes in inventories of the statement of profit or loss.
This caption amounts to €2,777 thousand, compared to €3,886 thousand at the previous year end. It includes direct tax assets offset, where possible, against the tax liabilities at the same date.
At 31 December 2022, this caption amounts to €17,446 thousand compared to €9,788 thousand at 31 December 2021. It may be analysed as follows:
| (thousands of Euros) | 31.12.2022 | 31.12.2021 |
|---|---|---|
| Payments on account to suppliers | 1,547 | 1,388 |
| Other tax assets | 7,739 | 3,196 |
| VAT assets | 4,441 | 1,486 |
| Prepayments and accrued income | 2,693 | 2,551 |
| Other | 1,025 | 1,168 |
| Total | 17,446 | 9,788 |
Other tax assets mainly consist of the tax credits for research and development expenditure in addition to the current portion of the tax asset arising from the substitute tax paid to align the higher carrying amounts with the relevant tax bases upon consolidation as detailed in note 4.
At 31 December 2022, this caption amounts to €12,875 thousand compared to €483 thousand at 31 December 2021. It may be analysed as follows:
| (thousands of Euros) | 31.12.2022 | 31.12.2021 |
|---|---|---|
| Available-for-sale securities | 2,855 | - |
| Derivatives | 1,791 | 13 |
| Other financial assets | 230 | 465 |
| Deposit accounts | 8,000 | 6 |
| Total | 12,875 | 483 |
At 31 December 2022, the deposit accounts include temporary deposits of liquidity including accrued interest income before tax withholdings.
Available-for-sale securities refer to investments, with major counterparties, aimed at managing part of the group's liquidity. The objective of these financial assets is the collection of contractual cash flows comprising payments of principal and interest at fixed rates at specific maturities.
The derivatives are forwards and currency options agreed to hedge commercial transactions but which do not qualify for hedge accounting and interest rate swaps agreed to cover fluctuations in interest rates on loans. Fair value gains and losses are recognised in profit or loss. More information is available in the paragraph on financial instruments in note [35] Other information.
At 31 December 2022, this caption amounts to €96,636 thousand compared to €100,625 thousand at 31 December 2021. Reference should be made to the statement of cash flows for details of changes in the group's cash and cash equivalents.
| (thousands of Euros) | 31.12.2022 | 31.12.2021 | |
|---|---|---|---|
| Current accounts and post office deposits | 96,599 | 100,585 | |
| Cash | 37 | 40 | |
| Total | 96,636 | 100,625 |
Current accounts and post office deposits are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to immaterial currency risk.
At the reporting date, the group's current account credit balances were not pledged in any way.
The parent's fully paid-up and subscribed share capital consists of 100,000,000 ordinary shares. Equity may be analysed as follows:
| (thousands of Euros) | 31.12.2022 | 31.12.2021 |
|---|---|---|
| Share capital | 10,000 | 10,000 |
| Legal reserve | 2,000 | 2,000 |
| Translation reserve | 5,849 | 3,855 |
| Hedging reserve | 1,252 | (51) |
| Other reserves | 29,233 | 17,079 |
| Retained earnings | 94,921 | 73,009 |
| Profit for the year | 62,124 | 49,059 |
| Total | 205,377 | 154,951 |
The hedging reserve includes the fair value gains and losses on interest rate hedges.
Other reserves include a reserve related to the share-based long-term incentive (LTI) plan. Note [35] provides more information about this plan. The caption also includes the call option for the remaining 30% of Sauber held by the non-controlling investor, as defined in the acquisition agreement. In accordance with the IFRS, the fair value of the call option was recognised in equity.
At the reporting date, the parent had 30,482 treasury shares. In April, it assigned 70,036 shares upon completion of the second cycle of share options granted on 1 October 2018 for the 2019-2021 vesting period.
The earnings per share are calculated by dividing the profit attributable to the owners of the parent by the weighted average number of outstanding ordinary shares. There are no potentially dilutive ordinary shares (e.g., stock options or convertible bonds).
The earnings per share are as follows:
| (thousands of Euros) | 31.12.2022 | 31.12.2021 |
|---|---|---|
| Number of shares (in thousands) | 99,592 | 99,899 |
| Profit for the year (in thousands of Euros) | 62,124 | 49,059 |
| Earnings per share (in Euros) | 0.62 | 0.49 |
The shareholders resolved to distribute a dividend of €0.15 per share on 22 April 2022, which resulted in the distribution of €14,995 thousand in June 2022.
At 31 December 2022, this caption amounts to €15,868 thousand compared to €14,923 thousand at 31 December 2021 and comprises the non-controlling interests in CFM (49%), Carel Thailand Co. Ltd (20%) and Sauber (30%).
| (thousands of Euros) | 31.12.2022 | Profit for the year |
Other comprehensive income |
Dividends distributed |
Change in consolidation scope |
31.12.2021 |
|---|---|---|---|---|---|---|
| Equity attributable to non controlling interests |
15,868 | 2,675 | 16 | (3,268) | 1,521 | 14,923 |
These captions may be analysed as follows:
| (thousands of Euros) | 31.12.2022 | 31.12.2021 |
|---|---|---|
| Bank loans and borrowings at amortised cost | 51,784 | 67,942 |
| Amounts due to bondholders | 39,468 | - |
| Lease liabilities | 27,216 | 23,520 |
| Effective hedging derivatives | - | 27 |
| Other loans and borrowings at amortised cost | 489 | 771 |
| Other financial liabilities | 2,436 | 1,440 |
| Non-current financial liabilities | 121,392 | 93,700 |
| (thousands of Euros) | 31.12.2022 | 31.12.2021 |
|---|---|---|
| Bank loans at amortised cost | 69,716 | 60,281 |
| Lease liabilities | 5,434 | 4,037 |
| Amounts due to bondholders | 114 | - |
| Bank borrowings at amortised cost | 901 | 85 |
| Derivatives held for trading at fair value through profit or loss | 236 | 45 |
| Other loans and borrowings at amortised cost | 194 | 802 |
| Other financial liabilities | 7,365 | 0 |
| Current financial liabilities | 83,960 | 65,250 |
Amounts due to bondholders refer to the issue and placement of non-convertible bonds subscribed by funds managed by Pricoa (Prudential Insurance Company of America). Specifically, on 6 May 2022, the parent issued two ten-year non-convertible bonds with a nominal amount of €20,000 thousand due in May 2032 and with a five-year interest-only period. These bonds are part of a private shelf agreement whereby the parent can ask Pricoa, on an uncommitted basis and over the next three years, to subscribe additional bonds up to a total maximum amount of USD150 million. They are guaranteed by the parent and certain subsidiaries.
Fixed interest accrues on these bonds from the subscription date and repayment of principal will take place annually starting from the fifth year on a straight-line basis, with the first and last payment dates in May 2028 and May 2032, respectively.
The bonds are unrated and will not be listed on regulated markets. Compliance with the following covenants is checked every six months:
At 31 December 2022, such covenants were complied with:
| (thousands of Euros) | Currency | Original amount |
Maturity | Interest rate | Outstanding liability |
Current | Non-current |
|---|---|---|---|---|---|---|---|
| Senior A bonds | EUR | 20,000 | 2032 | Fixed | 19,791 | 57 | 19,734 |
| Senior B bonds | EUR | 20,000 | 2032 | Fixed | 19,791 | 57 | 19,734 |
| Total | 114 | 39,468 |
The following table shows the main characteristics of the bank loans by maturity at 31 December 2022:
| BANK LOANS | |||||||
|---|---|---|---|---|---|---|---|
| (thousands of Euros) | Currency | Original amount |
Maturity | Interest rate | Outstanding liability |
Current | Non-current |
| Intesa San Paolo | EUR | 6,000 | 2023 | Fixed | 6,000 | 6,000 | - |
| Unicredit | EUR | 20,000 | 2023 | Fixed | 2,222 | 2,222 | - |
| Unicredit | EUR | 20,000 | 2023 | Floating | 3,333 | 3,333 | - |
| BNP Paribas | EUR | 20,000 | 2023 | Floating | 10,010 | 10,010 | - |
| BNP Paribas | EUR | 30,000 | 2023 | Floating | 4,284 | 4,284 | - |
| Mediobanca | EUR | 25,000 | 2023 | Floating | 25,115 | 25,115 | |
| Intesa San Paolo | EUR | 10,000 | 2024 | Fixed | 3,771 | 2,514 | 1,257 |
| Crédit Agricole FriulAdria | EUR | 10,000 | 2024 | Fixed | 3,776 | 2,516 | 1,259 |
| Credem | EUR | 15,000 | 2026 | Floating | 14,987 | 3,636 | 11,350 |
| Intesa San Paolo | EUR | 10,000 | 2026 | Floating | 10,011 | 1,667 | 8,345 |
| Intesa San Paolo | EUR | 20,000 | 2026 | Floating | 20,024 | 3,333 | 16,691 |
| Mediobanca | EUR | 20,000 | 2026 | Floating | 15,716 | 4,444 | 11,272 |
| Banco BPM | EUR | 79 | 2023 | Floating | 53 | 53 | - |
| Carige | EUR | 350 | 2026 | Fixed | 336 | 87 | 249 |
| Carige | EUR | 250 | 2027 | Fixed | 250 | 57 | 193 |
| Carige | EUR | 400 | 2026 | Fixed | 400 | 109 | 291 |
| MPS | EUR | 787 | 2027 | Fixed | 712 | 154 | 558 |
| Banco BPM | EUR | 500 | 2025 | Floating | 500 | 182 | 318 |
| Total | 121,499 | 69,716 | 51,784 |
The following loans require compliance with covenants:
statements.
At 31 December 2022, such covenants have been respected.
The derivatives included under current financial liabilities are forwards and currency options agreed to hedge commercial transactions which do not qualify for hedge accounting. The effective hedging derivatives include the fair value of five IRSs agreed to hedge interest rate risk on the Banca Nazionale del Lavoro, Unicredit and Mediobanca loans. More information is available in note [35] Other information.
A breakdown of other loans and borrowings at amortised cost is provided below, with indication of whether they are current or non-current:
| (thousands of Euros) | Currency | Original amount |
Maturity | Interest rate | Outstanding liability |
Current | Non-current |
|---|---|---|---|---|---|---|---|
| MedioCredito Centrale Progetto Horizon 2020 |
EUR | 1,241 | 2026 | Fixed | 681 | 193 | 489 |
| Total | 681 | 193 | 489 |
The following tables show changes in current and non-current financial liabilities, comprising lease liabilities (including cash and non-cash change:
| (thousands of Euros) | 31.12.2022 | Net cash flows |
Fair value gains or losses |
Reclassification | First time adoption of IFRS 16 |
Change in consolidation scope |
31.12.2021 |
|---|---|---|---|---|---|---|---|
| Bank loans | 69,716 | (45,432) | - | 54,535 | - | 331 | 60,281 |
| Amounts due to bondholders | 114 | 114 | - | - | - | - | - |
| Bank borrowings | 901 | (719) | - | - | - | 1,534 | 85 |
| Other loans and borrowings | 194 | (368) | (469) | 197 | - | 32 | 802 |
| Derivatives | 236 | (45) | 236 | - | - | 45 | |
| Other financial liabilities | 7,365 | (311) | - | 697 | - | 6,979 | - |
| Current financial liabilities | 78,526 | (46,761) | (233) | 55,429 | - | 8,876 | 61,213 |
| (thousands of Euros) |
31.12.2022 | Net cash flows |
Fair value gains or losses |
Reclassification | First time adoption of IFRS 16 |
Change in consolidation scope |
Exchange differences |
31.12.2021 |
|---|---|---|---|---|---|---|---|---|
| Bank loans and borrowings at amortised cost |
51,784 | 36,843 | - | (54,535) | - | 1,534 | - | 67,942 |
| Amounts due to bondholders |
39,468 | 39,468 | - | - | - | - | - | - |
| Effective hedging derivatives |
- | (27) | - | - | - | - | 27 | |
| Other loans and borrowings at amortised cost |
489 | (85) | - | (197) | - | - | - | 771 |
| Other financial liabilities |
2,436 | - | (500) | - | 1,469 | 27 | 1,440 | |
| Non-current financial liabilities |
94,177 | 76,226 | (27) | (55,232) | 0 | 3,003 | 27 | 70,180 |
| 31.12.2022 | Increases | Restatement | Repayments | Interest | Exchange | Change in | 31.12.2021 | |
|---|---|---|---|---|---|---|---|---|
| (thousands of Euros) |
of financial liabilities |
differences | consolidation scope |
|||||
| Lease liabilities | 32,650 | 6,769 | (385) | (5,473) | 604 | (232) | 3,811 | 27,556 |
A breakdown of net financial debt calculated in accordance with ESMA guideline no. 32-382-1138 of 4 March 2021 is provided below.
| FINANCIAL DEBT | |||
|---|---|---|---|
| (thousands of Euros) | 31.12.2022 | 31.12.2021 | |
| A | Cash | 96,636 | 100,625 |
| B | Cash equivalents | 8,000 | 6 |
| C | Other current financial assets | 4,875 | 478 |
| D | Cash and cash equivalents (A+ B + C) | 109,512 | 101,109 |
| E | Current loans and borrowings | 8,502 | 130 |
| F | Current portion of non-current loans and borrowings | 75,344 | 65,119 |
| G | Current financial debt (E + F) | 83,847 | 65,250 |
| H | Current net financial position (G - D) | (25,665) | (35,859) |
| I | Non-current loans and borrowings | 81,924 | 93,673 |
| J | Debt instruments | 39,582 | 27 |
| K | Trade payables and other non-current liabilities | 11.556 | - |
| L | Non-current financial debt (I + J + K) | 133,062 | 93,700 |
| M | Net financial debt (H + L) | 107.397 | 57,841 |
As also required by Consob warning no. 5/21 of 29 April 2021, it is noted that the group has recognised a liability subject to conditions related to the option for the non-controlling interests in CFM and Sauber as
detailed in note 18 while the earn-out mechanism for Senva is included in the section K of the above reported table as Non current liabilities. In compliance with such notice, it is also noted that the group recognised liabilities for defined benefit plans of €8,129 thousand (note 16) and provisions for risks of €5,852 thousand (note 15).
At 31 December 2022, provisions for risks amount to €5,852 thousand compared to €4,064 thousand at 31 December 2021 and they are broken down as follows:
| (thousands of Euros) | 31.12.2022 | 31.12.2021 |
|---|---|---|
| Provision for agents' termination benefits | 725 | 851 |
| Provision for commercial complaints | 33 | 93 |
| Provision for product warranties | 980 | 393 |
| Other provisions | 2,714 | 820 |
| Total - non-current | 4,451 | 2,157 |
| Provision for commercial complaints | 1,401 | 1,907 |
| Total - current | 1,401 | 1,907 |
| Total | 5,852 | 4,064 |
The following table shows changes in this caption:
| (thousands of Euros) |
31.12.2022 | Accruals | Utilisa tions |
Reversals | Restate-ments | Change in consolidation scope |
Exchange differences |
31.12.2021 |
|---|---|---|---|---|---|---|---|---|
| Provision for agents' termination benefits |
725 | 41 | (34) | - | (133) | - | - | 851 |
| Provision for commercial complaints |
33 | - | - | (66) | - | - | 6 | 93 |
| Provision for product warranties |
980 | 605 | (8) | - | - | - | (11) | 393 |
| Other provisions | 2,714 | - | - | - | - | 1,874 | 19 | 820 |
| Total - non-current | 4,451 | 646 | (42) | (66) | (133) | 1,874 | 14 | 2,157 |
| Provision for commercial complaints |
1,401 | 390 | (530) | (367) | - | - | - | 1,907 |
| Total - current | 1,401 | 390 | (530) | (367) | - | - | - | 1,907 |
| Total | 5,852 | 1,036 | (572) | (433) | (133) | 1,874 | 14 | 4,064 |
The provision for agents' termination benefits includes the estimated liability arising from application of the current regulations and contractual terms covering the termination of agency agreements. Unlike the accruals to the provisions for risks and product warranties and the other provisions, the accrual to this provision is classified under services in the statement of profit or loss.
The provision for commercial complaints decreased due to utilisations during the year.
Other provisions represent management's best estimate of the other liabilities that arise during normal operations and increased by €1,874 after allocation of the purchase price paid for the Klingenburg Group.
This caption mainly consists of the group's liability for post-employment benefits and post-term of office benefits for directors recognised by the Italian group companies and the German subsidiary, HygroMatik GmbH. These benefits qualify as defined benefit plans pursuant to IAS 19 and the related liabilities are calculated by an independent actuary. Changes in the liability are shown below.
| (thousands of Euros) | 31.12.2022 |
|---|---|
| Opening balance | 8,612 |
| Interest cost | 70 |
| Change in consolidation scope | 431 |
| Other variations | (213) |
| Employee benefits paid | (429) |
| Exchange differences | 12 |
| Accruals | 3,092 |
| Transfer to pension plans | (2,366) |
| Actuarial losses | (1,080) |
| Closing balance | 8,129 |
The group also performed sensitivity analyses to assess reasonable changes in the main assumptions underlying the calculations. Specifically, it assumed an increase or decrease of 0.25% in the discount rate. The resulting change in the liability would be immaterial.
At 31 December 2022, this caption amounts to €18,242 thousand, compared to €17,110 thousand at 31 December 2021. Changes in deferred tax liabilities are available in note [5] Deferred tax assets. A breakdown of deferred tax liabilities is as follows:
| (thousands of Euros) | 2022 tax base | 2022 deferred tax liabilities |
2021 tax base | 2021 deferred tax liabilities |
|---|---|---|---|---|
| Discounting of non-current liabilities | 285 | 84 | 104 | 29 |
| Differences from consolidation adjustments | 58,792 | 15,532 | 57,714 | 15,364 |
| Differences on amortisation and depreciation and other differences in standards |
5,999 | 1,145 | 6,241 | 1,177 |
| Other | 7,225 | 1,481 | 2,968 | 540 |
| Total | 72,301 | 18,242 | 67,027 | 17,110 |
The largest differences is due to the allocation of non-taxable amounts upon the first-time consolidation of the acquirees.
The balance of €67,256 thousand mainly refers to the liability for the put and call options on non-controlling interests in CFM (€52,427 million) and Sauber (€1,228 million) and the liability for the earn-out mechanism for Senva (€11,556 thousand). Reference should be made to the Consolidation scope section for more details on such options and the measurement method used.
In 2022, the group recognised interest expense of €608 thousand and a fair value loss of €2,235 thousand. The caption is broken down as follows:
| (thousands of Euros) | 31.12.2022 | 31.12.2021 | |
|---|---|---|---|
| Other | 2,048 | 292 | |
| Call options on non-controlling interests | 65,208 | 49,602 | |
| Total | 67,256 | 49,894 |
"Other" comprises non-current deferred income and non-current liabilities for the LTI incentive plans
Trade payables amount to €77,174 thousand, compared to €66,444 thousand at 31 December 2021. The increase is mostly due to the group's greater business volumes and the inclusion of the new acquirees in the consolidation scope, contributing trade payables of €3,931 thousand.
There are no significant past due amounts at 31 December 2022.
At 31 December 2022, this caption amounts to €4,987 thousand compared to €4,775 thousand at the end of the previous year. It entirely consists of direct income tax liabilities.
This caption is broken down in the following table and mostly includes personnel-related liabilities (wages and salaries, tax withholdings and social security contributions).
| (thousands of Euros) | 31.12.2022 | 31.12.2021 |
|---|---|---|
| Social security contributions | 5,654 | 4,888 |
| Tax withholdings | 2,084 | 2,018 |
| Other current tax liabilities | 552 | 263 |
| VAT liabilities | 2,409 | 1,467 |
| Wages and salaries, bonuses and holiday pay | 18,485 | 16,301 |
| Other | 3,042 | 3,135 |
| Total | 32,226 | 28,072 |
Revenue amounts to €544,852 thousand, compared to €420,418 thousand in 2021, with a year-on-year increase of 29.6%.
It is shown net of discounts and allowances.
Revenue generated by services amounts to €9,609 thousand compared to €3,524 thousand in 2021. A breakdown of revenue by business segment is as follows:
| (thousands of Euros) | 2022 | 2021 | Variation % |
|---|---|---|---|
| HVAC | 371,852 | 270,011 | 37.7% |
| REF | 168,934 | 145,826 | 15.8% |
| Core revenue | 540,786 | 415,837 | 30.0% |
| Non-core revenue | 4,066 | 4,581 | (11.2%) |
| Total | 544,852 | 420,418 | 29.6% |
There are no group customers that individually contribute more than 5% to the group's revenue. A breakdown of revenue by geographical segment is as follows:
| (thousands of Euros) | 2022 | 2021 | Variation % |
|---|---|---|---|
| Europe, Middle East and Africa | 382,730 | 302,311 | 26.6% |
| APAC | 78,186 | 62,725 | 24.6% |
| North America | 70,974 | 46,030 | 54.2% |
| South America | 12,962 | 9,352 | 38.6% |
| Total | 544,852 | 420,418 | 29.6% |
Other revenue amounts to €5,780 thousand, an increase on the €5,779 thousand balance in 2021. The caption may be broken down as follows:
| (thousands of Euros) | 2022 | 2021 | Variation % |
|---|---|---|---|
| Grants related to income | 1,661 | 3,130 | (46.9%) |
| Sundry cost recoveries | 2,487 | 1,973 | 26.1% |
| Other revenue and income | 1,632 | 677 | >100% |
| Total | 5,780 | 5,779 | 0.0% |
The grants related to income of €1,661 thousand (2021: €3,130 thousand) mainly relate to the tax credit for development activities recognised as provided for by Law no. 190 of 23 December 2014 (the 2015 Stability Law). In 2021, this caption included the grant given to the US group company as part of the Covid-19 support.
Sundry cost recoveries mostly refer to transport and other costs.
Other revenue and income principally comprise amounts charged to suppliers and customers.
This caption amounts to €248,838 thousand, compared to €190,138 thousand in 2021. A breakdown of the caption is as follows:
| (thousands of Euros) | 2022 | 2021 | Delta % |
|---|---|---|---|
| Costs of raw materials, consumables and goods and changes in inventories | (248,838) | (190,138) | 30.9% |
| % of revenue | (45.7%) | (45.2%) | 1.0% |
The group incurred costs of €70,234 thousand for services in 2022, up €19,200 thousand on the previous year. Transport costs increased due to the higher business volumes as did most of the cost items. The rise in consultancies refers to the non-recurring costs for M&A activities (€3,018 thousand).
The new acquirees contributed costs of around €3,878 thousand for services.
The caption may be broken down as follows:
| (thousands of Euros) | 2022 | 2021 | Delta % |
|---|---|---|---|
| Transport | (21,257) | (15,843) | 34.2% |
| Consultancies | (11,105) | (8,884) | 25.0% |
| Business trips and travel | (3,601) | (1,726) | >100% |
| Use of third party assets | (2,183) | (1,712) | 27.5% |
| Maintenance and repairs | (7,452) | (5,561) | 34.0% |
| Marketing and advertising | (2,191) | (926) | >100% |
| Outsourcing | (2,957) | (2,307) | 28.2% |
| Agency commissions | (2,100) | (1,821) | 15.3% |
| Utilities | (3,323) | (1,806) | 84.0% |
| Fees to directors, statutory auditors and independent auditors | (2,334) | (2,143) | 8.9% |
| Insurance | (1,869) | (1,460) | 28.1% |
| Telephone and connections | (1,045) | (922) | 13.3% |
| Other services | (8,816) | (5,923) | 48.8% |
| Total | (70,234) | (51,034) | 37.6% |
This caption amounts to €705 thousand, compared to €1,249 thousand in 2021 and is almost entirely related to development projects capitalised under intangible assets. Part of the capitalised costs refer to self-constructed equipment and machinery recognised under property, plant and equipment. The caption may be analysed as follows:
| (thousands of Euros) | 2022 | 2021 | Variation % |
|---|---|---|---|
| Development expenditure | 561 | 1,117 | (49.7%) |
| Self-constructed plant and machinery | 144 | 132 | 8.9% |
| Total | 705 | 1,249 | (43.5%) |
The group incurred research and development expenditure of €20,002 thousand (excluding that of the companies acquired in the year) and €19,034 thousand in 2022 and 2021, respectively. Only the amounts described above were capitalised, as they met the requirements of IAS 24.
This caption amounts to €118,425 thousand for 2022 compared to €99,379 thousand for the previous year. Breakdowns of this caption and of the workforce by employee category are as follows:
| (thousands of Euros) | 2022 | 2021 | Variation % |
|---|---|---|---|
| Wages and salaries, including bonuses and accruals | (93,496) | (77,583) | 20.5% |
| Social security contributions | (19,449) | (17,294) | 12.5% |
| Defined benefit plans | (3,092) | (2,808) | 10.1% |
| Other costs | (2,388) | (1,694) | 41.0% |
| Total | (118,425) | (99,379) | 19.2% |
| 31.12.2022 | 31.12.2021 | |||
|---|---|---|---|---|
| year end | average | year end | average | |
| Managers | 69 | 66 | 62 | 62 |
| White collars | 1,315 | 1,215 | 1,114 | 1,087 |
| Blue collars | 915 | 802 | 689 | 657 |
| Total | 2,299 | 2,082 | 1,865 | 1,806 |
This caption amounts to €2,115 thousand, compared to €1,594 thousand for the previous year. It may be broken down as follows:
| (thousands of Euros) | 2022 | 2021 | Variation % | |
|---|---|---|---|---|
| Gains on the sale of non-current assets | 73 | 367 | (80.1%) | |
| Prior year income | 1,464 | 665 | >100% | |
| Release of provisions for risks | 433 | 57 | >100% | |
| Other income | 1,970 | 1,089 | 79.4% | |
| Losses on the sale of non-current assets | (27) | (17) | 3.4% | |
| Prior year expense | (296) | (157) | 88.1% | |
| Other taxes and duties | (1,540) | (1,008) | 52.7% | |
| Impairment losses on loans and receivables | (564) | (354) | 59.0% | |
| Accrual to the provisions for risks | (995) | (734) | 35.6% | |
| Credit losses | (36) | (15) | >100% | |
| Other costs | (628) | (398) | 57.8% | |
| Other expense | (4,085) | (2,683) | 51.7% | |
| Other expense, net | (2,115) | (1,594) | 32.7% |
Accruals to the provisions for risks mainly comprise accruals to the provision for commercial complaints. Reference should be made to note [15] for more information.
Amortisation and depreciation amount to €24,414 thousand, up from €20,844 thousand in the previous year. The caption also includes depreciation and amortisation arising from the PPA procedure (€5,642 thousand). It may be analysed as follows:
| (thousands of Euros) | 2022 | 2021 | Variation % |
|---|---|---|---|
| Amortisation | (9,642) | (7,792) | 23.7% |
| Depreciation | (14,736) | (13,050) | 12.9% |
| Impairment losses | (36) | (2) | >100% |
| Total | (24,414) | (20,844) | 17.1% |
Net financial expense amounts to €3,173 thousand compared to €2,355 thousand in the previous year. The caption may be broken down as follows:
| (thousands of Euros) | 2022 | 2021 | Variation % |
|---|---|---|---|
| Gains on financial assets | 357 | 26 | >100% |
| Interest income | 140 | 81 | 71.9% |
| Gains on derivatives | 103 | 8 | >100% |
| Other financial income | 208 | 97 | >100% |
| Dividends received | 30 | 107 | (72.2%) |
| Financial income | 838 | 319 | >100% |
| Bank interest expense | (786) | (861) | (8.8%) |
| Lease interest expense | (580) | (670) | (13.4%) |
| Other interest expense | (587) | (24) | >100% |
| Losses on derivatives | (269) | (104) | >100% |
| Other financial expense | (1,036) | (613) | 69.0% |
| Net fair value losses on financial assets and liabilities | (146) | 0 | >100% |
| Interest expense on call options for non-controlling interests | (608) | (402) | 51.2% |
| Financial expense | (4,011) | (2,675) | 50.0% |
| Net financial expense | (3,173) | (2,355) | 34.7% |
Other interest expense includes interest on the bonds issued in 2022.
Net exchange losses amount to €861 thousand compared to €1,430 thousand in 2021 and are mostly a result of the US dollar's depreciation. They are made up as follows:
| (thousands of Euros) | 2022 | 2021 | Variation % |
|---|---|---|---|
| Exchange losses | (11,572) | (5,144) | >100% |
| Exchange gains | 10,711 | 3,714 | >100% |
| Net exchange losses | (861) | (1,430) | (39.8%) |
The net fair value loss of €2,235 thousand refers to the fair value measurement of the liabilities recognised for the call options related to the subsidiaries CFM and Sauber at the reporting date.
This caption shows a net profit of €2,360 thousand compared to €508 thousand in 2021. It mostly comprises the fair value gains on the initial investment in Arion (40%), which subsequently entered the consolidation scope.
This caption amounts to €18,603 thousand compared to €11,967 thousand in the previous year. It may be broken down as follows:
| (thousands of Euros) | 2022 | 2021 |
|---|---|---|
| Current taxes | (20,983) | (14,986) |
| Deferred taxes | 1,828 | 3,013 |
| Taxes relative to prior years | 552 | 7 |
| Total | (18,603) | (11,967) |
A reconciliation of the tax expense for the year is as follows using the profit before tax shown in the statement of profit or loss:
| (in migliaia di euro) | 2022 | 2021 |
|---|---|---|
| Profit before tax | 83,402 | 61,055 |
| Income taxes calculated using the theoretical IRES rate | (20,016) | (14,653) |
| IRAP | (834) | (816) |
| Effect of the different rates applied by the group companies operating in other countries | 1,387 | 2,056 |
| Withholding tax on dividends | (1,643) | (438) |
| Taxes relative to prior years | 552 | 7 |
| Effect of the different rates applied by the group companies operating in other countries and other changes | 1,952 | 1,877 |
| Total | (18,603) | (11,967) |
Reference should be made to note [5] for information about changes in deferred tax assets and liabilities and their composition.
The tax rate applied for the reconciliation of the tax burden is 24%, in line with the IRES rate in Italy, the country in which most of the group's taxable profit is earned.
Under IFRS 8, an entity shall disclose information to enable users of its financial statements to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates. Based on the group's internal reporting system, the business activities for which it earns revenue and incurs expenses and the operating results which are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated and to assess its performance, the group has not identified individual operating segments but is an operating segment as a whole.
The group is active on international markets and, hence, is exposed to currency and interest rate risks. Specifically, the currencies generating these risks are the US dollar, the Polish zloty and the Chinese renminbi.
The group has a hedging policy to mitigate the risks which involves the use of derivatives, options and forwards, mostly with maturities of less than one year. Transactions in place at the reporting date involving currency hedging transactions are as follows:
| 31.12.2022 | 31.12.2021 | |||||||
|---|---|---|---|---|---|---|---|---|
| (thousands of Euros) forward |
Purchases * |
Sales * | Positive fair value ** |
Negative fair value ** |
Purchases * |
Sales * | Positive fair value ** |
Negative fair value ** |
| USD/CNY | - | 11,900 | 50 | (78) | - | - | - | - |
| USD/EUR | - | 1,000 | - | (49) | - | - | - | - |
| ZAR/USD | - | 7,000 | - | (11) | - | 6,000 | 8 | (3) |
| CNY/USD | - | - | - | - | - | 600 | - | (1) |
| EUR/CNY | - | 2,000 | - | (99) | - | - | - | - |
| THB/USD | - | - | - | - | - | 5,500 | - | (1) |
| Total forwards | 50 | (236) | 8 | (5) | ||||
| Options | ||||||||
| USD/EUR | 5,000 | - | 94 | - | - | 4,100 | 4 | - |
| EUR/CNY | - | 2,000 | 0 | - | - | - | - | - |
| USD/CNY | - | 6,000 | 0 | - | - | - | - | - |
| Total options | 94 | - | 4 | - | ||||
| Total | 144 | (236) | 12 | (5) |
* in thousand local currency
** in euro thousand
The next table provides information about the interest rate swaps hedging the related risk:
| (in migliaia di euro) | Notional amount |
Fixed interest rate |
Maturity | Fair value 31.12.2022 |
Fair value 31.12.2021 |
|---|---|---|---|---|---|
| BNL | 30,000 | -0.11% | 19/11/2022 | n.a. | (41) |
| BNL | 20,000 | -0.02% | 30/04/2023 | 102 | (67) |
| Unicredit | 20,000 | -0.04% | 30/04/2023 | 24 | (41) |
| Mediobanca | 25,000 | -0.42% | 04/08/2023 | 478 | 9 |
| Mediobanca | 20,000 | -0.31% | 26/06/2026 | 1,044 | 72 |
Derivatives hedging foreign currency assets and liabilities are recognised at fair value with any gains or losses recognised in profit or loss. They are natural hedges of the related risks, which are recognised pursuant to IFRS 9.
The 2018-2022 equity-settled performance plan resolved by the shareholders on 7 September 2018 is an equity-settled incentive plan, with the free assignment of shares to members of boards of directors and/or company employees. The plan is divided into three rolling cycles (vesting periods), each lasting three years (2018-2020, 2019-2021 and 2020-2022), at the end of which the shares will be distributed, after checking that the performance objectives have been reached and based on the date of the board of directors' resolution.
The number of shares allocated is subject to achieving performance objectives based on adjusted EBITDA and cash conversion ratios. The performance objectives are independent of one another and will be calculated separately for each vesting period.
On 4 March 2022, the parent's board of directors approved the assignment of treasury shares upon conclusion of the second vesting period (2019-2021). It had granted 62,946 share options with a fair value of €855 thousand on 2 October 2019 for this vesting period.
In April, it assigned 70,039 treasury shares to 18 beneficiaries for a total of €768 thousand. The gain of €87 thousand between the fair value of the shares assigned, measured using the rolling FIFO method, and their fair value at the grant date was reclassified to an available income-related reserve.
In accordance with IFRS 2 Share-based payments, the fair value of the shares calculated at the grant date applying the Black-Scholes method is recognised in profit or loss as personnel/directors expense, on a systematic basis over the vesting period with a balancing entry in equity.
In 2022, the group recognised an expense of €408 thousand in profit or loss and the same amount was also recognised as an increase in equity. This amount represents the amount attributable to the third vesting period of the plan (2020-2022), the fair value of which amounts to €865 thousand.
In March 2021, the parent's board of directors approved:
Both plans are reserved for the executive directors, key management personnel and employees of the parent and its subsidiaries who play a key role in achievement of the group's objectives. The parent's shareholders
approved the plans in April 2021.
The term, vesting periods (three rolling cycles), beneficiaries and performance objectives (cumulative adjusted EBITDA for each vesting period (weight of 50%), cash conversion - average value of the vesting periods (weight of 30%), ESG targets - average achievement of a number of sustainability indicators (weight of 20%)) are the same for both plans.
On 10 November 2022, the parent's board of directors resolved to execute the LTI cash plan for the 2022-2024 vesting period (similarly to its decision taken for the 2021-2023 vesting period one year earlier) as this plan is less complicated compared to the operating and tax management of the LTI share plan, both for the parent and its beneficiaries. The board of directors also established the percentage of gross annual remuneration for the cash benefit for each beneficiary for a total of approximately €1,770 thousand.
The cash to be actually paid to each beneficiary will be calculated at the end of the 2022-2024 vesting period considering whether they have met the performance objectives established in the plan's regulation.
Pursuant to IAS 19 Employee benefits, cash-settled incentive plans qualify as defined benefit plans and, therefore, the liability was calculated by an independent actuary using the projected unit credit method as required by the standard. This method determines the average present value of the obligations accrued for the service provided by the beneficiary up to the valuation date.
The parent recognised a cost of €882 thousand in profit or loss in 2022 and a similar amount under Other noncurrent liabilities at 31 December 2022.
The next table shows the financial assets and liabilities recognised in accordance with IFRS 7, broken down by the categories established by IFRS 9 at 31 December 2022 and 2021 and their fair value:
| 31.12.2022 | |||||
|---|---|---|---|---|---|
| (in migliaia di euro) | IFRS 9 category | Carrying amount |
Level 1 | Level 2 | Level 3 |
| Derivatives | Financial instruments held for trading | 1,791 | 1,791 | ||
| Available-for-sale securities | Available-for-sale financial assets | 2,855 | 2,855 | ||
| Other financial assets | Loans and receivables | 8,230 | 8,000 | 230 | |
| Other current financial assets | 12,875 | ||||
| Trade receivables | Loans and receivables | 93,692 | 93,692 | ||
| Total financial assets | 116,568 | ||||
| including: | Available-for-sale financial assets | 2,855 | |||
| Financial instruments held for trading | 1,791 | ||||
| Loans and receivables | 101,922 | ||||
| Bank loans and borrowings | Financial liabilities at amortised cost | 51,784 | 51,784 | ||
| Amounts due to bondholders | Financial liabilities at amortised cost | 39,468 | 39,468 | ||
| Other loans and borrowings | Financial liabilities at amortised cost | 489 | 489 | ||
| Non-current lease liabilities | Financial liabilities at amortised cost | 27,216 | 27,216 | ||
| Effective hedging derivatives | Financial instruments held for trading | - | 0 | ||
| Other non-current financial liabilities | Financial liabilities at amortised cost | 2,436 | 2,436 | ||
| Non-current financial liabilities | 121,392 | ||||
| Bank borrowings | Financial liabilities at amortised cost | 901 | 901 | ||
| Current bank loans | Financial liabilities at amortised cost | 69,716 | 69,716 | ||
| Current lease liabilities | Financial liabilities at amortised cost | 5,434 | 5,434 | ||
| Amounts due to bondholders | Financial liabilities at amortised cost | 114 | 114 | ||
| Derivatives | Financial instruments held for trading | 236 | 236 | ||
| Other loans and borrowings | Financial liabilities at amortised cost | 194 | 194 | ||
| Other current financial liabilities | Financial liabilities at amortised cost | 7,365 | 7,365 | ||
| Current financial liabilities | 83,960 | ||||
| Trade payables | Financial liabilities at amortised cost | 77,174 | 77,174 | ||
| Total financial liabilities | 282,527 | ||||
| including | Financial liabilities at amortised cost | 282,290 | |||
| Financial instruments held for trading | 236 |
At the reporting date, the parent has issued sureties of €3,261 thousand, including €133 thousand in favour of subsidiaries.
During 2022 and 2021, the group carried out commercial transactions with related parties as follows:
| RELATED AT 31.12.2021 | ||||||||
|---|---|---|---|---|---|---|---|---|
| (thousands of Euros) | Trade receivables |
Loan assets |
Trade payables |
Financial liabilities |
Revenue | Financial income |
Costs | Financial expense |
| Arion S.r.l. | - | 160 | (70) | - | 1 | - | (2,366) | - |
| Free Polska s.p.z.o.o. | 887 | - | (1,234) | - | 17 | 107 | (9,527) | - |
| Total associates | 887 | 160 | (1,304) | - | 18 | 107 | (11,893) | - |
| RN Real Estate S.r.l. | 12 | - | (442) | (13,103) | 14 | - | - | (198) |
| Arianna S.p.A. | 5 | - | - | - | 5 | - | - | - |
| Nastrificio Victor S.p.A. | - | - | (9) | - | - | - | (71) | - |
| Eurotest laboratori S.r.l. | 6 | - | (96) | - | 33 | - | (29) | - |
| Carel Real Estate Adratic d.o.o. | 2 | - | (17) | (2,269) | 2 | - | (1) | (88) |
| Agriturismo Le Volpi | - | - | (4) | - | - | - | (4) | - |
| Eurotec Ltd | 235 | - | (9) | - | 666 | - | (29) | - |
| Panther S.r.l. | - | - | (6) | - | - | - | (8) | - |
| Gestion A.Landry Inc | - | - | - | (53) | - | - | (2) | (1) |
| Humide Expert | - | - | - | - | - | - | (77) | - |
| Murat Cem Ozdemir | - | - | - | (1,698) | - | - | - | (35) |
| Others | - | - | (9) | - | 27 | - | (43) | - |
| Total other related parties | 260 | - | (592) | (17,123) | 747 | - | (264) | (322) |
| Total | 1,147 | 160 | (1,896) | (17,123) | 765 | 107 | (12,157) | (322) |
| (thousands of Euros) | Trade receivables |
Loan assets |
Trade payables |
Financial liabilities |
Revenue | Financial income |
Costs | Financial expense |
|---|---|---|---|---|---|---|---|---|
| Arion S.r.l. | - | - | - | - | - | - | (743) | - |
| Free Polska s.p.z.o.o. | 236 | - | (20) | - | 10 | 30 | (15,023) | - |
| Total associates | 131 | - | (563) | - | 7 | 30 | (15,471) | - |
| RN Real Estate S.r.l. | 12 | - | (217) | (15,226) | 14 | - | (2) | (67) |
| Nastrificio Victor S.p.A. | - | - | (39) | - | - | - | (72) | - |
| Eurotest laboratori S.r.l. | 4 | - | (137) | - | 7 | - | (319) | - |
| Carel Real Estate Adratic d.o.o. | 3 | - | (46) | (2,047) | 2 | - | (24) | (74) |
| Eurotec Ltd | 174 | - | (8) | - | 754 | - | (41) | - |
| Panther S.r.l. | - | - | (3) | - | - | - | (11) | - |
| Gestion A.Landry Inc | - | - | - | (30) | - | - | (3) | (1) |
| (thousands of Euros) | Trade receivables |
Loan assets |
Trade payables |
Financial liabilities |
Revenue | Financial income |
Costs | Financial expense |
|---|---|---|---|---|---|---|---|---|
| Humide Expert | - | - | (5) | - | - | - | (90) | - |
| Murat Cem Ozdemir | 4 | - | (1,623) | - | - | (41) | (38) | |
| Bridgport S.p.A. | - | - | (150) | - | 62 | - | (120) | - |
| Brimind S.r.l. | - | - | (17) | (71) | - | - | (8) | (1) |
| Others | 4 | - | (37) | (300) | 7 | - | (56) | - |
| Total other related parties | 197 | 4 | (659) | (19,297) | 846 | - | (787) | (181) |
| Total | 328 | 4 | (1,222) | (19,297) | 853 | 30 | (16,258) | (181) |
Transactions with RN Real Estate S.r.l. and Carel Real Estate Adriatic d.o.o. relate to the lease of the industrial buildings where the parent and the Croatian subsidiary carry out their business. Financial liabilities and expense have been recognised in accordance with IFRS 16.
Costs from Free Polska relate to non-group products purchased and resold by the subsidiary Alfaco Polska. All the related party transactions take place on an arm's length basis.
The following table shows the investees directly and indirectly controlled by the parent as well as all the legally-required disclosures necessary to prepare consolidated financial statements:
| COMPANY | Registered office | Country | Currency | Share Capital/quota |
|---|---|---|---|---|
| at | ||||
| 31/12/21 | ||||
| Parent: | ||||
| Carel Industries S.p.A | Brugine (Padova) | Italy | Euro | 10.000.000 |
| Consolidated investees: | ||||
| C.R.C. S.r.l. | Bologna | Italy | Euro | 98.800 |
| Carel Deutschland Gmbh | Frankfurt | Germany | Euro | 25.565 |
| Carel France Sas | St. Priest, Rhone | France | Euro | 100.000 |
| Carel U.K. Ltd | London | GB | Pound Sterling | 350.000 |
| Carel Sud America Instrumentacao Eletronica Ltda |
San Paolo | Brazil | Real | 31.149.059 |
| Carel Usa Inc | Pennsylvania | USA | Us Dollar | 5.000.000 |
| Carel Asia Ltd | Hong Kong | Honk Kong | Hong Kong Dollar | 15.900.000 |
| Carel HVAC&R Korea Ltd | Seul | South Korea | South Korean Won | 550.500.000 |
| Carel South East Asia Pte. Ltd. | Singapore | Singapore | Singapore dollar | 100.000 |
| Carel Australia PTY Ltd | Sydney | Australia | Australian Dollar | 100 |
| Carel Electronic Suzhou Ltd | Suzhou | People's Republic of China | Renminbi | 75.019.566 |
| Carel Controls Iberica SI | ||||
| Barcelona | Spain | Euro | 3.005 | |
| Carel Controls South Africa (Pty) Ltd | Johannesburg | South Africa | Rand | 4.000.000 |
| Carel ACR System India (Pvt) Ltd | Mumbai | India | Rupee | 1.665.340 |
| Carel RUS Llc | St. Petersburg | Russia | Ruble | 6.600.000 |
| Carel Nordic AB | Hoganas | Sweden | Swedish Krona | 550.000 |
| Carel Middle East | Dubai | Dubai | Dirham | 4.333.877 |
| Carel Mexicana, S. DE R.L. DE C.V. | Guerra, Tlalpan | Mexico | Peso | 12.441.149 |
| Carel Adriatic D.o.o. | Rijeka | Croatia | Kuna | 54.600.000 |
| Carel (Thailand) Co. Ltd. | Bangkok | Thailand | Baht | 16.000.000 |
| Alfaco Polska Sp.z.o.o. | Wrocław | Poland | Zloty | 420.000 |
| Carel Japan | Tokyo | Japan | Yen | 60.000.000 |
| Recuperator S.p.A. | Rescaldina (MI) | Italy | Euro | 500.000 |
| Hygromatik G.m.b.H. | Hamburg | Germany | Euro | 639.115 |
| Carel Ukraine LLC | Kiev | Ukraine | UAH | 700.000 |
| Enersol | Beloeil | Canada | CAD | 100 |
| CFM Sogutma Ve Otomasyon | Izmir | Turkey | EUR | 2.473 |
| Enginia Srl | Trezzo Sull'Adda (MI) | Italy | EUR | 10.400 |
| Arion S.r.l. | Bolgare (BG) | Italy | Euro | n.a. |
| Sauber S.r.l. | Mantova (MN) | Italia | EUR | n.a. |
| Profit for the period 31/12/2021 |
Profit for the period 31.12.2022 |
Consolidation method |
Share/quota holder | Investment % | Share Capital/quota at |
|---|---|---|---|---|---|
| EURO | EURO | 31/12/22 | 31/12/22 | ||
| 27.257.788 | 47.510.497 | 10.000.000 | |||
| 1.006.045 | 1.786.049 | line by line | Carel Industries S.p.A. | 100% | 98.800 |
| 2.740.965 | 3398294 | line by line | Carel Industries S.p.A. | 100% | 25.565 |
| 1.542.492 | 307.078 | line by line | Carel Industries S.p.A. | 100% | 100.000 |
| 780914 | 834976 | line by line | Carel Industries S.p.A. | 100% | 350.000 |
| 725.607 | 1.499.483 | line by line | Carel Industries S.p.A. | 53,02% | 31.149.059 |
| Carel Electronic Suzhou Ltd | 46,98% | ||||
| 4387128 | 4930312 | line by line | Carel Industries S.p.A. | 100% | 33.000.000 |
| 965.448 | 1.091.645 | line by line | Carel Industries S.p.A. | 100% | 15.900.000 |
| (259.795) | 152.932 | line by line | Carel Electronic Suzhou Ltd | 100% | 550.500.000 |
| 47.340 | 38.375 | line by line | Carel Asia Ltd | 100% | 100.000 |
| 646.691 | 755.747 | line by line | Carel Electronic Suzhou Ltd | 100% | 100 |
| 8.860.203 | 12.225.823 | line by line | Carel Industries S.p.A. | 100% | 75.019.566 |
| 1.086.135 | 1.231.800 | line by line | Carel Industries S.p.A. | 100% | 3.005 |
| 752.573 | 887.257 | line by line | Carel Electronic Suzhou Ltd | 100% | 4.000.000 |
| 250.282 | 269.342 | line by line | Carel France Sas | 0,01% | 1.665.340 |
| Carel Electronic Suzhou Ltd | 99,99% | ||||
| 766.473 | 661.100 | line by line | Carel Industries S.p.A. | 99% | 6.600.000 |
| Carel France Sas | 1% | ||||
| 376.013 | 563.478 | line by line | Carel Industries S.p.A. | 100% | 550.000 |
| 36.804 | 191.012 | line by line | Carel Industries S.p.A. | 100% | 4.333.877 |
| 31.270 | 149.880 | line by line | Carel Usa LCC | 100% | 12.441.149 |
| 5.018.539 | 10.081.835 | line by line | Carel Industries S.p.A. | 100% | 54.600.000 |
| 200.803 | 318.849 | line by line | Carel Electronic Suzhou Ltd | 50% | 16.000.000 |
| Carel Australia PTY Ltd | |||||
| 3.588.710 | 3.781.544 | line by line | Carel Industries S.p.A. | 100% | 420.000 |
| 45.768 | 343.809 | line by line | Carel Industries S.p.A. | 100% | 60.000.000 |
| 582.470 | 743.392 | line by line | Carel Industries S.p.A. | 100% | 500.000 |
| 3.414.278 | 3.355.354 | line by line | Carel Industries S.p.A. | 100% | 639.115 |
| 84.397 | (60.170) | line by line | Alfaco Polska Zoo | 100% | 700.000 |
| 267.595 | 170.242 | line by line | Carel Usa Inc | 100% | 100 |
| 699.538 | 5.963.175 | line by line | Carel Industries S.p.A. | 51% | 2.473 |
| 898.967 | 812.102 | line by line | Recuperator S.p.A. | 100% | 10.400 |
| n.a. | 451.741 | line by line | Carel Industries S.p.A. | 70% | 100.000 |
| 535.282 | line by line | Carel Industries S.p.A. | 100% | 100.000 |
Senva Inc. Oregon USA USD n.a. - 100% Carel Usa Inc Integrale 31.285 n.a.
| COMPANY | Registered office | Country | Currency | Share Capital/quota | |
|---|---|---|---|---|---|
| at | |||||
| 31/12/21 | |||||
| Klingenburg GmbH | Gladbeck | Germany | EUR | n.a. | |
| Klingenburg Usa LLC | RALEIGH | USA | USD | n.a. | |
| Klingenburg Uk Ltd | Folkestone | GB | GBP | n.a. | |
| Klingenburg Iberica Slu | Madrid | Spain | EUR | n.a. | |
| Klingenburg International Sp. z o.o. | Świdnica | Poland | PLN | n.a. |
The subsidiaries Carel Deutschland GmbH, HygroMatik GmbH and Klngenburg GmbH, included in these consolidated financial statements, used the exemption provided for by section 264 (3) of the German Commercial Code (HGB) for the disclosures, audit and the preparation of the notes to their financial statements at 31 December 2022 and the accompanying directors' reports.
The fees paid to directors and statutory auditors for the year ended 31 December 2022 are as follows:
| DIRECTORS | ||
|---|---|---|
| (thousands of Euros) | 2022 | 2021 |
| Remuneration and fees | 1,549 | 1,445 |
| Other non-monetary benefits | 22 | 23 |
| Fair value of share-based payments | 174 | 175 |
| Total | 1,745 | 1,643 |
| STATUTORY AUDITORS | ||
|---|---|---|
| (thousands of Euros) | 2022 | 2021 |
| Fixed fees and fees for participation in committees | 103 | 104 |
| Total | 103 | 104 |
| KEY MANAGEMENT PERSONNEL | ||||
|---|---|---|---|---|
| (thousands of Euros) | 2022 | 2021 | ||
| Remuneration and fees | 1,447 | 1,400 | ||
| Other non-monetary benefits | 18 | 21 | ||
| Post-employment benefits or termination benefits | - | |||
| Fair value of share-based payments | 182 | 182 | ||
| Total | 1,647 | 1,603 |
| Profit for the period 31/12/2021 |
Profit for the period 31.12.2022 |
Consolidation method |
Share/quota holder | Investment % | Share Capital/quota at |
|---|---|---|---|---|---|
| EURO | EURO | 31/12/22 | 31/12/22 | ||
| n.a. | 327.304 | Integrale | Carel Industries S.p.A. | 100% | 38.400 |
| n.a. | 6.087 | Integrale | Carel Industries S.p.A. | 100% | 699.671 |
| n.a. | 154.661 | Integrale | Carel Industries S.p.A. | 100% | 100 |
| n.a. | 10.707 | Integrale | Carel Industries S.p.A. | 100% | 3.500 |
| n.a. | 794.545 | Integrale | Carel Industries S.p.A. | 100% | 50.000 |
| n.a. | 31.285 | Integrale | Carel Usa Inc | 100% | - |
See the relevant section of the directors' report.
The following table, prepared pursuant to article 149-duodecies of Consob Issuers' Regulation, highlights the fees pertaining to the year for audit services and non-audit services provided by the independent auditors.
| SERVICES | ||||
|---|---|---|---|---|
| (thousands of Euros) | Independent auditors | Recipient | 2022 fees | 2021 fees |
| Deloitte & Touche S.p.A. | Carel Industries S.p.A. | 239 | 238 | |
| Audit | Deloitte & Touche S.p.A. | Società controllate | 55 | 48 |
| Rete Deloitte & Touche | Società controllate | 154 | 123 | |
| Deloitte & Touche S.p.A. | Carel Industries S.p.A. | 45 | 44 | |
| Attestation services | Deloitte & Touche S.p.A. | Società controllate | 5 | 5 |
| Total | 498 | 458 |
A list of the subsidies, grants, fees for paid positions and any type of economic benefits received from public administrations and other parties defined by article 1.125 of Law no. 124 of 2017, that the group companies received in 2022 is set out below:
Carel Industries S.p.A.:
• other than the tax credit for research and development and technological innovation activities - Law no. 160/2019 as subsequently amended and supplemented, the Ministerial decree of 26 May 2020, Law no. 178/2020, Industry 4.0 - Law no. 160/2019, maxi-amortisation and depreciation - Law no. 178/2020, Ecobonus - Law no. 296/2006 Energy and gas tax credit - Law decree no. 144/2022 and Law decree no. 176/2022 due for the year, the parent did not receive any subsidies, grants, fees for paid positions or any type of economic benefits not of a general nature and that are not consideration, remuneration or compensation from the public administration and other parties as defined by article 35 of Law no. 34 of 30 September 2019, which replaced article 1.125 of law no. 124/2017.
Recuperator S.p.A.:
Arion S.r.l.:
• other than the tax credit for research and development and technological innovation activities - Law no. 160/2019 as subsequently amended and supplemented due for the year, the group company did not receive any subsidies, grants, fees for paid positions or any type of economic benefits not of a general nature and that are not consideration, remuneration or compensation from the public administration and other parties as defined by article 35 of Law no. 34 of 30 September 2019, which replaced article 1.125 of Law no. 124/2017.
C.r.c S.r.l.:
• other than the tax credit for research and development and technological innovation activities - Law no. 160/2019 as subsequently amended and supplemented, the Ministerial decree of 26 May 2020, Law no. 178/2020, Industry 4.0 - Law no. 160/2019, maxi-amortisation and depreciation - Law no. 178/2020, Ecobonus - Law no. 296/2006 Energy and gas tax credit - Law decree no. 144/2022 and Law decree no. 176/2022 due for the year, the group company did not receive any subsidies, grants, fees for paid positions or any type of economic benefits not of a general nature and that are not consideration, remuneration or compensation from the public administration and other parties as defined by article 35 of Law no. 34 of 30 September 2019, which replaced article 1.125 of law no. 124/2017.
Sauber Sr.l.:
• other than the tax credit for research and development and technological innovation activities - Law no. 160/2019 as subsequently amended and integrated, Ministerial decree of 26 May 2020, Law no. 178/2020 Industry 4.0, Law no. 160/2019 Superbonus article 121 of Law decree no. 34/2022, Ecobonus and photovoltaic systems, article 121 of Law decree no. 34/2020, restructuring of historical buildings article 121
of Law decree no. 34/2020 due for the year, the group company did not receive any subsidies, grants, fees for paid positions or any type of economic benefits not of a general nature and that are not consideration, remuneration or compensation from the public administration and other parties as defined by article 35 of Law no. 34 of 30 September 2019, which replaced article 1.125 of Law no. 124/2017.
Enginia S.r.l.:
• other than the tax credit for energy and gas - Law decree no. 144/2022 and Law decree no. 176/2022 due for the year, the group company did not receive any subsidies, grants, fees for paid positions or any type of economic benefits not of a general nature and that are not consideration, remuneration or compensation, from the public administration and other parties as defined by article 35 of Law no. 34 of 121 September 34, which replaced article 2022 of Law no. 124/2017.
________________________________ ________________________________
Brugine, 2 March 2023
Chief executive officer Manager in charge of financial reporting
Francesco Nalini Nicola Biondo
Via N. Tommaseo, 78/C int. 3 35131 Padova Italia
Tel: +39 049 7927911 Fax: +39 049 7927979 www.deloitte.it
To the Shareholders of Carel Industries S.p.A.
We have audited the consolidated financial statements of Carel Industries S.p.A. and its subsidiaries (the "Group"), which comprise the consolidated statement of financial position as at 31 December 2022, and the consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2022, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of national regulations issued pursuant to art. 9 of Italian Legislative Decree no. 38/05.
We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of Carel Industries S.p.A. (the "Company") in accordance with the ethical requirements applicable under Italian law to the audit of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Ancona Bari Bergamo Bologna Brescia Cagliari Firenze Genova Milano Napoli Padova Parma Roma Torino Treviso Udine Verona
Sede Legale: Via Tortona, 25 - 20144 Milano | Capitale Sociale: Euro 10.328.220,00 i.v.
Codice Fiscale/Registro delle Imprese di Milano Monza Brianza Lodi n. 03049560166 - R.E.A. n. MI-1720239 | Partita IVA: IT 03049560166
Il nome Deloitte si riferisce a una o più delle seguenti entità: Deloitte Touche Tohmatsu Limited, una società inglese a responsabilità limitata ("DTTL"), le member firm aderenti al suo network e le entità a esse correlate. DTTL e ciascuna delle sue member firm sono entità giuridicamente separate e indipendenti tra loro. DTTL (denominata anche "Deloitte Global") non fornisce servizi ai clienti. Si invita a leggere l'informativa completa relativa alla descrizione della struttura legale di Deloitte Touche Tohmatsu Limited e delle sue member firm all'indirizzo www.deloitte.com/about.
© Deloitte & Touche S.p.A.
Impairment of goodwill allocated to the Recuperator, Hygromatik, CFM Sogutma ve Otomasyon Anonim Sirketi (CFM), Enginia and Senva CGU's
| goodwill related to the CGU, Recuperator for Euro 6,3 million, Hygromatic for Euro 38,5 million, CFM Sogutma ve OtomasyonAnonim Sirketi (CFM) for Euro 11,4 million, Enginia for Euro 6,6 million and Senva for Euro 18,5 million. |
|
|---|---|
| These amounts were recognized as a result of the acquisition of Recuperator and Hygromatic in 2018, CFM and Enginia 2021 and Senva in 2022. |
|
| As required by IAS 36 "impairment of assets", goodwill is not amortized, but is subjected to impairment test at least annually, which compares the recoverable value of the CGUs – based on the value of in use methodology – and the carrying value which includes goodwill and other tangible and intangible assets allocated to the CGUs. |
|
| In their disclosure, the Directors explain the main assumptions applied in performing the test and provide the break-even analysis in relation to the main key factors of the impairment test, to evaluate the degree of sensitivity of the test to the changes in the key variables. |
|
| The Directors explain that the process of performing the impairment test is complex and is based on assumptions related, among others, to the expectations in term of cash flows for the CGU and the determination of appropriate discount rates (WACC) and long-term growth (g-rate). |
|
| The Directors report, also, that the assumptions used are reasonable and are the most likely scenarios based on the information available, but the output of the impairment test may be different if any of the assumptions change significantly. |
|
| We have considered the significance of the amount of the goodwill, the subjectivity of the estimates underlying the determination of the cash flows for the CGU and the key variables of the impairment test. As a result we have assessed that the impairment test represents a key audit matter for the audit of Carel Group's consolidated financial statements. |
|
| Note 2 of the consolidated financial statements provides disclosure on impairment tests and the effects of sensitivity analysis resulting from the changes in the key variables used in performing the impairment test. |
| Audit procedures | |
|---|---|
| performed | As part of our audit, among others, we performed the following audit |
| procedures, supported by the experts belonging to our network: | |
| • understanding of the process and relevant controls designed and | |
| implemented by the Directors related to the process of performing and | |
| approving the impairment test; | |
| • analysis of the main assumptions adopted to prepare the expectations in | |
| terms of cash flows, also using industry data, and obtaining information from | |
| the Directors; | |
| • analysis of the actual results obtained by the Group compared to the | |
| expectations, in order to investigate the nature of the variations and | |
| evaluate the reliability of the planning process; • analysis of the reasonableness of the discount rates (WACC) and long-term |
|
| growth (g-rate); | |
| • test of the clerical accuracy of the model used to calculate the value in use | |
| for the CGUs; | |
| • test of the accuracy of the determination of the carrying value of the CGUs | |
| and comparison with the recoverable value resulting from the impairment | |
| test; | |
| • examination of the sensitivity analysis prepared by the Directors. | |
| Finally we verified the appropriateness and the compliance of the disclosure | |
| on the impairment test provided by the Directors to the requirements of IAS | |
| 36. | |
| Accounting for Business combination's operation | |
| Description of the key | |
| audit matter | In 2022, Carel Group completed a business combination, through an "asset |
| purchase agreement" performed by the subsidiary Carel US, of the | |
| "business" of Senva INC, a company active in the sensor manufacturing | |
| sector mainly related to the air conditioning and ventilation sectors. | |
| This acquisition has been recognized in the consolidated financial statements | |
| in accordance with the IFRS3 "Business combinations", that provides for a | |
| "purchase price allocation (PPA)" process, and that required the Directors to | |
| assess the fair value of the assets acquired and liabilities assumed, also | |
| through the support of independent expert. | |
| The allocation of values within the PPA process generated, among others, at | |
| the acquisition date, goodwill for Euro 18,5 million, intangible assets with a | |
| defined useful life for Euro 27,1 million. |
Considering that certain information, already present at the date of the acquisition, are still under analysis, the PPA is not considered as closed in accordance with the provisions of the IFRS3.
| The purchase contract also includes deferred consideration and an "earn out" in relation to which a liability was recognized at fair value, that amounted to € 15,3 million as at 31 December 2022. We have considered the significance of this business combination for the consolidated financial statements of Carel Group, the complexity of the assumptions made by the Directors which, by their nature, imply significant judgments. As a result we assessed the Business combination to be a key audit matter for the audit of Carel Group's consolidated financial statements. In the disclosure related to the "consolidation scope" and in note 18 of the consolidated financial statements, the Directors described the process implemented and the effects on the consolidated financial statements. |
|
|---|---|
| Audit procedures performed |
As part of our audit, among others, we performed the following audit procedures, supported by the experts belonging to our network: |
| • analysis of the agreement related to the acquisition, in order to understand their main terms and conditions; • understanding of the relevant controls designed and implemented by the Directors related to the acquisition accounting process; • analysis of the reports prepared by the independent expert and of the criteria used by the Directors to account for the Business combination in compliance with IFRS 3, with particular reference to the criteria and assumptions used to identify the assets transferred, liabilities incurred, to estimate the fair value and the methods used to determine the value of goodwill; • discussion of the main assumptions adopted by the Directors and independent expert and re-performing of the calculation of the values identified; • analysis of the criteria applied by the Directors to recognize and measure the liability related to the earn out. Finally, we verified the appropriateness of the disclosure on the Business combination, and the compliance with the applicable accounting standards. |
The Directors are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of national regulations issued pursuant to art. 9 of Italian Legislative Decree no. 38/05, and, within the terms established by law, for such internal control as the Directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
106 ANNUALREPORT CAREL INDUSTRIES GROUP
In preparing the consolidated financial statements, the Directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they have identified the existence of the conditions for the liquidation of the Company or the termination of the business or have no realistic alternatives to such choices.
The Board of Statutory Auditors is responsible for overseeing, within the terms established by law, the Group's financial reporting process.
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing (ISA Italia) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with International Standards on Auditing (ISA Italia), we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance, identified at an appropriate level as required by ISA Italia, regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence applicable in Italy, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report.
The Shareholders' Meeting of Carel Industries S.p.A. appointed us on 13 April 2018 as auditors of the Company for the years from 31 December 2018 to 31 December 2026.
We declare that we have not provided prohibited non-audit services referred to in art. 5 (1) of EU Regulation 537/2014 and that we have remained independent of the Company in conducting the audit.
We confirm that the opinion on the financial statements expressed in this report is consistent with the additional report to the Board of Statutory Auditors, in its role of Audit Committee, referred to in art. 11 of the said Regulation.
The Directors of Carel Industries S.p.A. are responsible for the application of the provisions of the European Commission Delegated Regulation (EU) 2019/815 with regard to the regulatory technical standards on the specification of the single electronic reporting format (ESEF – European Single Electronic Format) (hereinafter referred to as the "Delegated Regulation") to the consolidated financial statements as at 31 December 2022, to be included in the annual financial report.
We have carried out the procedures set forth in the Auditing Standard (SA Italia) n. 700B in order to express an opinion on the compliance of the consolidated financial statements with the provisions of the Delegated Regulation.
In our opinion, the consolidated financial statements as at 31 December 2022, have been prepared in XHTML format and have been marked up, in all material respects, in accordance with the provisions of the Delegated Regulation.
Due to certain technical limitations, some information contained in the explanatory notes to the consolidated financial statements, when extracted from XHTML format in an XBRL instance, may not be reproduced in the same way as the corresponding information displayed in the consolidated financial statements in XHTML format.
The Directors of Carel Industries S.p.A. are responsible for the preparation of the report on operations and the report on corporate governance and the ownership structure of Carel Group as at 31 December 2022, including their consistency with the related consolidated financial statements and their compliance with the law.
We have carried out the procedures set forth in the Auditing Standard (SA Italia) n. 720B in order to express an opinion on the consistency of the report on operations and some specific information contained in the report on corporate governance and the ownership structure set forth in art. 123-bis, n. 4 of Legislative Decree 58/98, with the consolidated financial statements of Carel Group as at 31 December 2022, and on their compliance with the law, as well as to make a statement about any material misstatement.
In our opinion, the above-mentioned report on operations and some specific information contained in the report on corporate governance and the ownership structure are consistent with the consolidated financial statements of Carel Group as at 31 December 2022 and are prepared in accordance with the law.
With reference to the statement referred to in art. 14, paragraph 2 (e), of Legislative Decree 39/10, made on the basis of the knowledge and understanding of the entity and of the related context acquired during the audit, we have nothing to report.
The Directors of Carel Industries S.p.A. are responsible for the preparation of the non-financial statement pursuant to Legislative Decree 30 December 2016, no. 254.
We verified the approval by the Directors of the non-financial statement.
Pursuant to art. 3, paragraph 10 of Legislative Decree 30 December 2016, no. 254, this statement is subject of a separate attestation issued by us.
DELOITTE & TOUCHE S.p.A.
Signed by Cristiano Nacchi Partner
Padua, Italy 29 March 2023
As disclosed by the Directors on page 102, the accompanying consolidated financial statements of Carel Group constitute a non-official version which is not compliant with the provisions of the Commission Delegated Regulation (EU) 2019/815.
This independent auditor's report has been translated into the English language solely for the convenience of international readers. Accordingly, only the original text in Italian language is authoritative.
CAREL INDUSTRIES HQs Via dell'Industria, 11 35020 Brugine - Padova (Italy) Tel. (+39) 0499 716611 Fax (+39) 0499 716600 [email protected]
© 2022 CAREL INDUSTRIES S.p.A. All rights reserved.
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